In a key step toward a more sustainable steel industry, Ternium has received a Medium Green rating from S&P Global Ratings, one of the world’s leading credit and sustainability assessment agencies, for its Green Financing Framework linked to the new steel plant in Pesquería, Mexico. According to S&P, the project reflects major progress towards lower emission steelmaking by replacing traditional blast-furnace methods with DRI-EAF technologies, but also strong alignment with global sustainability standards, and aligns Ternium’s operations with international best practices in steel sustainability.

Issued under the Shades of Green methodology, this distinction not only confirms the project’s alignment with international green financing principles but also highlights Ternium’s commitment to producing steel with lower emissions and higher efficiency, placing the company among the key players driving the global shift toward low-carbon economies.

Ternium Mexico’s green loan for the Pesquería steel mill, valued at USD 1.25 billion, marks a milestone: it is the first financing of its kind within the Techint Group and remains rare even in the global steel industry. By tying this effort to its decarbonization goals, Ternium is strengthening its position in the energy transition, securing more favorable financial terms, and laying the groundwork for a sustainable future.

Ternium is transforming its Pesquería plant through a series of initiatives designed to cut emissions and boost efficiency. The shift to DRI–EAF technology replaces slab production based on blast furnaces with processes that emit far less CO₂. The plant will also source 50% of its electricity from renewable energy, capture and sell around 280,000 tons of CO₂ per year, and recycle 1.7 million tons of scrap metal, advancing the circular economy. Its design even allows for future conversion to green hydrogen, reinforcing Ternium’s commitment to decarbonization and climate resilience in a sector responsible for roughly 8% of global emissions.

“It all began when the Debt team decided to finance the Pesquería project—a new DRI–EAF steel mill—through a green loan,” explains Carolina Ortiz Soler, Senior ESG Investor Relations Manager at Ternium. “This represented a shift from the Group’s traditional syndicated financing model, as it required meeting specific criteria, including obtaining a second-party opinion on the financing framework. We selected S&P Global Ratings for that review. The framework lays out the project’s contribution to Ternium’s decarbonization goals, its link to the company’s broader strategy, and its alignment with the UN Sustainable Development Goals.”

“This was Ternium’s first green loan—and likely the first within the entire Techint Group,” says Santiago Chiviló, Global Financial Analysis Senior Manager. “It was over a year in the making, with months of intense work behind the scenes and with the banks. We knew it wouldn’t be an easy process, but the outcome was well worth it—not only because of the favorable financial conditions we secured, but also because of the S&P rating, which reflects a tremendous team effort.”

Santiago adds that: “More than a year ago, Ternium’s partner banks suggested developing a green financing structure, either through a corporate green loan—funded by “green” capital—or a Sustainability-Linked Loan (SLL), in which performance is tied to specific sustainability KPIs over time. After carefully reviewing both options, we decided to move forward with a corporate green loan,” he notes. “This structure gave us access to green funds while limiting our commitments to reporting key metrics, without the need for guarantees or penalties.”

S&P’s Medium Green rating acknowledges that the project represents meaningful progress in cutting greenhouse gas emissions, even as further improvements will be needed for longer-term solutions.

According to the agency’s analysis, the new plant enables steel production with a substantially smaller carbon footprint, aligning with Ternium’s internal target to reduce the emissions intensity of hot rolling by 15% by 2030 across Scopes 1, 2, and 3.

In the short term, this certification opens the door to sustainable financing and attracts investors who prioritize projects with a clear environmental benefit. By integrating renewable energy—through both in-house generation and power purchase agreements covering at least 50% of the new plant’s electricity needs—Ternium is helping to address Mexico’s heavy reliance on fossil fuels, which still account for more than 75% of the national grid.

At the same time, initiatives such as capturing and selling around 280,000 tons of CO₂ per year and recycling 1.7 million tons of scrap metal in 2023 enhance efficiency and reinforce the circular economy, reducing the risk of locking in technologies dependent on natural gas.

“Within the challenge of structuring this financing as a green loan, our Investor Relations team worked on formalizing the Green Financing Framework in line with the Green Loan Principles (LMA/LSTA/APLMA),” explains Carolina Ortiz Soler. “The framework established governance mechanisms, defined the eligible project, and set annual reporting requirements aligned with our Sustainability Report. It was a new process for everyone, involving close interaction with S&P, preparing multiple deliverables, and committing to transparent reporting on project progress and fund allocation. The Medium Green rating is an excellent outcome and reflects the teamwork across many areas of Ternium, including Global Environment, Environment in Mexico, and Engineering.”

As the steel industry faces mounting pressure to decarbonize, this certification positions Ternium at the forefront of integrated solutions—combining efficiency, renewable energy, carbon capture, and increased scrap use—to advance toward a low-carbon future without losing competitiveness.

With initiatives like this, Ternium not only meets today’s sustainability expectations but also strengthens its reputation as a responsible and forward-thinking company, including in the financial sector. “Banks are recognizing standout financings of the year, and ours has been nominated by Latin Finance and GBM for the 2025 awards,” Chiviló notes.