CAP and AZA reactivate Huachipato steel plant in Chile with green steel plan worth US$484 million

CAP and Aceros AZA have agreed to a business combination worth roughly US$484 million to restart the Huachipato steelworks in Chile's Biobio region using green steel technology. AZA, which operates electric arc furnaces powered by scrap metal and renewable electricity, will take operational control while CAP retains a 15% equity stake. The deal shifts away from blast furnace steelmaking, which emits up to 2.1 tonnes of CO2 per tonne of steel, toward EAF production that can cut that figure to below 0.6 tonnes. Chile's renewable energy resources are a key enabler. The country has some of the world's lowest solar power costs in the Atacama region plus hydropower and wind in the south. This makes green hydrogen production potentially viable at under US$2 per kilogram, a threshold needed for hydrogen-based direct reduced iron steelmaking. For now, the plant will likely restart with scrap-based EAFs while longer-term hydrogen infrastructure is developed. The transaction also positions Huachipato to serve export markets under the EU's Carbon Border Adjustment Mechanism, which from 2026 will impose carbon costs on steel imports that do not meet European emissions standards. The deal structure, with shared equity and technology commitments from partners like SMS Group and Paul Wurth, suggests the decarbonization plan has been technically evaluated beyond the conceptual stage.