Masters of arts in development studies

5.2.2 Briquetting sector

Figure 5.2

Source: (Complejo Siderúrgico de Guayana. 2011)

The firms jointly created in 1998 an operator called Compañía Puerto de Palua (COPAL) which was in charge of managing Palua Port. After being granted Palua Port, the firms cooperatively made investments to adapt it premises for reception, stacking and loading the briquettes into the vessels. Figure 5.2 shows Palua Port and its facilities. As seen the Port has the capacity to anchor one vessel at a time. The photo shows two of the material piles; there are actually four piles, one for each firm that co-ordinately transport by train their products from plants to designated piles in Palua Port. They also invested in a soft-loader system that prevents briquettes from breaking down and to be downloaded softly into the vessel.

Firms also reported (Interview 06) being part of the Hot Briquetted Iron Association (HBIA) headquartered in the USA that according to its webpage is a:

Not-for-profit Corporation whose purpose is:

• 
  To promote HBI as the preferred source of merchant steelmaking metallics.
  
• 
  To inform ship owner/operators and charterers and terminal operators of the handling, shipping, and storage benefits of HBI.
  
• 
  To assist iron and steel producers in the effective use of HBI (Hot Briquetted Iron Association.).
  

Other forms of co-operation were also reported. As seen in chapter 3, interactions between briquetting sector and hubs have been source of innovations, for example co-operation between O.IRON and FMO gave rise to developing a unique technology to produce briquettes from iron ore fines called FINMET and co-operation between O.IRON and SIDOR triggered the fabrication of a new product: mini-briquette, much more suitable for SIDOR steel-making process. When it comes to inputs, the briquetting sector local embedded networks are strong. One respondent elaborated:

Our inputs are pellets, natural gas, electricity and water; those are the four basic inputs. In the case of pellets we have a contract with FMO. They fabricate pellets at the plant next to us. Natural gas comes from PDVSA, through gas pipes. The electricity comes from EDELCA (local producer) and industrial water comes from HIDRO BOLIVAR (local producer). Those are the four basic inputs that represent around 70% of production costs (Interview 09, emphases added)

However, when it comes to customers, they exchange mainly with external markets and their relationship with SIDOR seems to be weak (Interview 06, Interview 07, Interview 08, Interview 09). The briquette production is committed to external markets leading to disintegration of district inasmuch as this product could be used locally by the steel mills:

The firm have not been related with SIDOR, because this firm was created to produce briquettes to export, that was its purpose (Interview 06)

VENPRECAR was created to export; in that sense it had little relationship with SIDOR…the only local client was CASIMA (Interview 07)

We are basically exporters, we do not sell to domestic market, some material around 10% or 15% with low content of iron, we used to sell it to CASIMA and other portion to SIDOR, but basically firm’s business vision was to export (Interview 08)

Briquette is made to export (Interview 09)

To answer how ownership structure influences inter-firm interactions, it is worth to look at the evolution of briquette production. Figure 5.3 shows briquette production (HBI) from 1991 to 2010. As can be seen, HBI production stood at around 2 million tonnes per year in the 1990s up to 1998. Then it grew up substantially from 1998 to 2005 when briquetting sector reached its maximum level of production with slightly more than 5 million tonnes.