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Fabio Hernando Galán, president of Acerías Paz del Río, talks to The Energy Year about the importance of the company for Colombia’s economy, the role of its mining activities for its steel production and its circular-economy and sustainability initiatives. Acerías Paz del Río is a Colombian steel company.

What is the role of Acerías Paz del Río in Colombia’s economy?
Acerías Paz del Río is the flagship firm in the country’s steel industry. The company began in 1948 with the mission to develop the economy of Colombia. The main focus of the company was steel, which was an industry that had not yet been developed in this country. We also focused on energy through the mining of metallurgical coal.
As of today, we are the only integrated steelworks company in Colombia. We use molten minerals through a blast furnace to produce pig iron and then steel. We have been the backbone of Colombian industry and the engine of growth in Colombia for decades.
When Acerías Paz del Río was created, Bogotá was a city with barely 400,000 inhabitants. The whole process of building our capital city was done with our steel coming from the department of Boyacá.
Acerías Paz del Río holds 25% of the market share for Colombia’s long steel. We comprise 37% of the national steel industry in terms of GDP contribution and as much as 4% of Boyacá’s GDP. We continue to be a main actor in Boyacá. We are the main employer in the region, with 7,000 direct jobs and 21,000 indirect jobs. Around 86% of the workforce is from Boyacá, which says a lot about our commitment to the region.
In addition, we generate COP 285 billion [USD 65.8 million] in national and departmental taxes, including royalties around COP 45 billion [USD 1.05 million] annually. Nearly all purchases made by Acerías Paz del Río are local. Of the COP 1.3 trillion [USD 302.25 million] it buys, COP 1.1 trillion [USD 255.75 million] are local purchases. Annually we also make social investments worth COP 7 billion [USD 1.63 million].
We are also leaders in the infrastructure business. There are around 175,000 tonnes of steel that we deliver in the country for infrastructure works, including concessions for bridges, airports, viaducts and roads. We are now involved in the construction of the Bogotá Metro, for example. In sum, we are a very important contributor to Colombia’s economy and economic development.

How key are your mining activities for your steel production?
The production process in integrated steelmaking requires minerals. There are three strategic minerals in Colombia: iron, limestone and metallurgical coal. We have mining concessions for those three minerals. These come from our mines Uvo and Caliza in Boyacá and Mercedes and Santuario in Cundinamarca.
We are in fact a mining-based company. The annual quantities of minerals produced and processed fluctuate but are around 320,000 tonnes of metallurgical coal, 550,000-600,000 tonnes of iron ore and 180,000-200,000 tonnes of limestone per year.
While we directly mine for iron ore and limestone, we buy coal from various mines in Boyacá, Cundinamarca, Santander and Antioquia, as well as from other mines in other regions. The coal that we consume is responsible for around 15-20% of what we produce as end product.
We used to produce 100% of the coal we used. However, environmental standards have changed, and the coal mining business is complex today. This is why we go to the market to purchase the coal we need, which has also reduced our production costs.

What steps does the production of steel and other byproducts entail?
Raw material is transported via truck and, most importantly, via our electric train to our industrial plant, Belencito, which is in the municipality of Nobsa, Boyacá. We have our own railway, a 35-kilometre line between the location of our mines in the municipality of Paz de Río and our plant.
Our coal undergoes the process of coal beneficiation to turn it into coke. This coke has the property of being a flux for iron ore. If we were an exporter of coke – which we are not – we would be the largest exporter of coke because we could produce about 300,000 tonnes per year. However, all this is for our own consumption to produce steel.
All the fines generated when processing these minerals are then dumped into a blast furnace. Limestone is also used for various things in the process. It’s used to collect impurities from the process. The limestone is calcined and eventually becomes industrial lime. In sum, three semi-finished products enter the blast furnaces in beds: an iron ore bed, a coke bed and a sinter bed. After the smelting process, where iron ore is melted, pig iron is the first finished product.
Pig iron is then taken to steelworks, and it goes into furnaces in converters heated to an average temperature of 1,800 degrees. Oxygen is introduced to generate effervescence in the pig iron, so that impurities come out, and then the lime is applied. That lime picks up the phosphorus, and that’s where we obtain fertiliser as a byproduct.
Moreover, in the blast furnace, pig iron and slag cement are extracted. The latter is used to produce cement. When we have the liquid steel from the convertor, we process it in a casting machine, and that is when the first finished products come out, called billets. When the billets come out, they go to the rolling mills, where steel rods and other products are produced.
Our strength is in coils and drawn wire rods. Around 70% of our production follows this production scheme in our integrated steel mills. The other 30% of our production comes from the electric furnace process, which is based on the recycling of ferrous and non-ferrous materials and metals in general.

How is Acerías Paz del Río tapping into the circular economy and sustainability?
Around 30% of our production comes from electric furnaces using scrap recycling. This taps into the circular economy. We consume about 170,000 tonnes of scrap per year. We buy some of it from the market, and the rest we recover from our production process. This scrap is made out of ferrous and non-ferrous materials and metals.
The steel industry in general and Acerías Paz del Río in particular are two of the largest recyclers in Colombia. In the electric furnace, the scrap is melted, and thousands of ferroalloys are added. We use vanadium and sometimes niobium to give it certain properties. These come from China, which is the leader in ferroalloys.
The electric furnace line meets the converter line. Here, the two furnaces – the blast furnace and the electric furnace – come together, and the latter helps balance the relatively higher costs of the former. Subsequently, the billets come out. Then we make steel rods and other products.
This bet on the circular economy also highlights our concern for sustainability. Firstly, we reduce emissions by using our 100% electric train. Secondly, part of our operations are based on electric furnaces. This electricity comes primarily from hydro-based energy.
Our energy matrix is more or less 85% hydroelectric. We buy power on the market, and we buy hydro. We do so to ensure that we have a carbon footprint that aligns with Scopes 1 and 2 of the Sustainable Development Goals. 15% of our energy comes from other sources, which in Colombia is basically thermal. This thermal energy is needed to ensure electricity availability.
In addition, we are now constructing a solar park in Belencito, which will be critical for us. We consume 25 GWh per month. We will supply 6% of this electricity via our solar farm – this is 18 GWh per year. We should have this park done in H1 2025. This is equivalent to planting 486,000 trees or reducing around 2,800 tonnes of CO2 per year.
Lastly, we have achieved a 79% reduction in water consumption. We have three wastewater treatment plants. We are reusing and recirculating the water, processing 53 litres per second. The steel industry works at high temperatures – this is a very hot industry. We need a lot of cooling. Water is essential for cooling.

What production capacity do you have, and how key is the local market when selling steel?
Our production capacity stands at 385,000 tonnes per year, while our installed capacity is 485,000 tonnes per year. Our aim is to end 2024 with 435,000 tonnes sold, which is equivalent to COP 1.5 billion, or about USD 400 million.
Colombia is our natural market. Everything we produce, we sell here. In the past we have exported to Ecuador and Venezuela in very small quantities. However, there are very strong global competitors, such as China, Turkey, Brazil and Mexico. We therefore do not consider exporting.
Our niche market is Colombia, and there is a gigantic opportunity here for the steel market. If we were to look at the per-capita steel consumption statistics, the USA uses 222 kilos per person, Brazil 87 kilos per person and Colombia about 55 kilos per person. That indicates that the country is still to be built and that there is a very important opportunity for us. That is why we have specialised in civil infrastructure. We are by far the leaders in drawn wire rods. In the area of scrap, we have imported important quantities in 2024.

To what extent is Colombia being impacted by the importation of foreign steel?
We are experiencing a steel crisis worldwide. Colombia has been affected by competitive factors, especially the impact of imported Chinese steel. China produces 54% of the world’s steel and at much lower prices. They now have an important share of flat steel in this country.
Some time ago, countries such as India, Canada, the United States, Mexico and Brazil established tariffs of 25-30% on imported steel to prevent Chinese steel from destroying local producers.
Recently, Colombia followed them. Since October 21, 2024, steel imported from countries without free trade agreements has been subject to a 30% tariff. We expect this measure to help balance the market, enabling national producers to compete under fair conditions.

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