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Chile's Only Steelmaker Faces Closure Amidst Competition from Chinese Imports

Chile's steel industry at risk as Cap SA plans closure amid cheap Chinese imports, sparking political debate on protection measures.

By Mackenzie Crow

4/3, 14:12 EDT

Key Takeaway

  • Chile's only steelmaker, Cap SA, plans to shut down due to competition from cheap Chinese imports, threatening 20,000 jobs.
  • Chilean politicians urge President Boric to defend the steel industry against foreign competition amid debates on free trade vs. protectionism.
  • The crisis reflects broader global challenges with steel producers in Brazil and Colombia also impacted by cheap imports and trade dynamics.

Steel Industry Crisis

Chile faces a significant economic and political challenge as its only steelmaker, Cap SA, announced plans to shut down operations. This decision comes in the wake of an influx of cheap Chinese alloy, which has made it difficult for the local industry to compete. The closure of Cap SA's mills threatens 20,000 jobs and has sparked a national debate on the future of Chile's steel industry and its broader economic policies. Economy Minister Nicolas Grau emphasized the urgency of the situation in a Senate committee, suggesting it's not too late for stricter anti-dumping measures and urging mining companies to support the steel-making sector.

Political Response

In response to the looming shutdown, Chilean politicians are rallying to find solutions to preserve the steel industry. The lower house of Congress passed eight resolutions urging President Gabriel Boric to take action to defend the sector from foreign competition. This political movement highlights the tension between maintaining Chile's free-trade principles and protecting domestic industries from global market pressures. The debate is testing the Boric administration's commitment to its economic policies and its ability to navigate the challenges of globalization.

Global Context and Local Impact

The situation in Chile is not isolated, as steel producers in Brazil and Colombia also face challenges from cheap imports, primarily due to slower domestic demand in China and high trade tariffs in other regions. While the steel industry represents a small fraction of the region's economies, it is deemed strategic for infrastructure and manufacturing. The dilemma Chile faces—whether to raise tariffs to protect local industries or maintain its free-trade stance—mirrors broader debates on trade and industry protection in the face of globalization.

Management Quotes

  • Nicolas Grau, Economy Minister:

    "It wasn’t too late to seek stricter anti-dumping measures." "A call for mining companies not to be “indifferent” to the steel-making crisis."

  • Jorge Gonzalez, protesting steel worker:

    "To President Boric, you have a commitment to the Chilean people, not to the Chinese."