By T&T Patriot
It is abundantly clear that Trinidad and Tobago is in desperate need of foreign direct investment (FDI). However, it remains critically important to be extremely thoughtful when choosing which industries to pursue. A brief history of the domestic iron and steel industry sheds light on the actual value-add of the sector.
ISCOTT/Caribbean Ispat/ArcelorMittal
In the mid-1970s, a decision was made to monetise Trinidad and Tobago’s abundant and cheap natural gas by diversifying the economy into downstream iron and steel. This led to the creation of the Iron and Steel Company of Trinidad and Tobago (ISCOTT), which was commissioned in 1980 at the Point Lisas industrial estate. The original facility included two Midrex Direct Reduction Iron (DRI) modules with a combined capacity of 840 KTPA (thousand tonnes per annum) and a melt shop with two 90-tonne Demag electric arc furnaces (EAF). Total investment in 1980 stood at TT$1.06 billion (US$441 million). ISCOTT operated the facility from 1980 to 1988, suffering significant financial losses (accumulating to TT$2.1 billion in losses by 1988) and mounting debt. Consequently, the government leased the plant to PT Ispat of Indonesia in October 1988 with an option to buy after five years. In 1994, the government sold the facility to Caribbean Ispat Ltd. for US$75 million.
Caribbean Ispat Ltd. upgraded the facilities, commissioning a third Midrex module with a capacity of 1,360 KTPA in 1998 at an investment cost of US$$240 million. In 2004, the company was renamed Mittal Steel Point Lisas, and following the 2006 merger of Arcelor and Mittal, it became ArcelorMittal Point Lisas.
Over the decade from 2006 to 2016, the plant faced a series of crushing challenges, including worker unrest, low-cost competition from Turkey and China, rising domestic costs, and a global steel downturn. Production declined precipitously, and in March 2016, the plant was shuttered, resulting in the dismissal of 644 workers.
Cleveland-Cliffs/ISG
The Trinidad and Tobago Hot Briquetted Iron (HBI) project began in the mid-1990s as a joint venture among Cleveland-Cliffs, Lurgi Metallurgie, and LTV Steel. Production began in 2000 under Cliffs and Associates Ltd (CAL) using Circored® technology. However, operations ceased just a year later due to depressed global scrap and HBI prices, alongside structural changes in the joint venture. The New York Times reported the initial investment at US$150 million in April 1996.
In 2004, International Steel Group Inc. (ISG) purchased substantially all assets of the CAL Circored® HBI facility for USD $8 million in cash plus assumed liabilities. Production restarted in 2005, but the facility was quickly idled following Mittal Steel’s acquisition of ISG on April 15, 2005.
Nu-Iron Unlimited
Nu-Iron Unlimited is a subsidiary of the US-based Nucor Group. It was established in late 2004 when Nucor acquired the assets of an idled DRI plant in Louisiana. At the time, US natural gas prices were high, and supplies were tight, making Trinidad an attractive alternative. The plant was relocated from Louisiana to Point Lisas, and production began in late 2006 with an initial capacity of 1.8 million tonnes per year. Nucor’s 2004 budget for the relocation was USD $225 million. The DRI produced here is shipped directly to Nucor facilities in the US as raw feedstock.
Since its startup, the Nu-Iron facility has been upgraded to produce 2 million tonnes per year and is one of two DRI facilities Nucor operates. (Nucor started its first domestic US plant in Louisiana in 2013 with a 2.5 million-tonne capacity). Nu-Iron’s legacy 20-year natural gas contract, which began around 2008, secured highly attractive prices to incentivise the original investment. While it expires in 2028, the plant has maintained a history of solid production and is considered a model facility.
Key takeaways from 45 years of steel
The Gas magnet: Trinidad and Tobago was historically attractive due to abundant, low-cost natural gas and subsidised electricity. Nu-Iron chose T&T specifically to lock in a 20-year price advantage relative to US gas costs.
High-risk industry: Steel is notoriously cyclical and brutal. ArcelorMittal (the world’s second-largest steelmaker) could not sustain operations here, and ISG failed within a year of restarting.
Failed downstream targets: Efforts to build a robust local downstream manufacturing sector using billets and rods from Point Lisas never materialised. For example, Centrin closed in June 2011, retrenching 250 workers.
The 2028 Cliff: It remains to be seen if Nu-Iron will extend its agreement beyond 2028 under structurally higher natural gas prices and tighter global contract terms
Guardrails for the GORTT and NGC
As citizens look forward to a potential revival of the iron and steel industry, the Government (GORTT) and the National Gas Company (NGC) must practice healthy scepticism to avoid repeating past mistakes:
Protect the gas floor: For new investments, the state must not price gas below the current US$5.30/MMBTU benchmark, which NGC has declared as its next-best alternative. Selling gas at US$4.30/MMBTU to a plant consuming 20 MMscf/day creates an implicit subsidy of US$20,000 per day ($7.3 million per year). Retaining significant existing investments requires a very nuanced approach.
Defend electricity Rates: Electricity must not be sold below US$0.09–$0.10 per kWh, which directly reflects the US$5.30/MMBTU gas value.
Maintain contract parity: Committing to long-term gas or electricity supplies for new players risks creating friction with existing short-term contract holders, stoking investor concerns over unfair treatment.
Vet private equity and startups: Entities like TT Iron Steel Company Ltd and Aeternus Steel Company Ltd are startups with no proven operational track records. Similarly, Pinnacle Steel and Vanadium Corporation has zero visible history online, suggesting it may be a shell entity created by a private equity firm specifically for an opportunity in Trinidad and Tobago.
Re-evaluate subsidy allocation: If a subsidy is deemed necessary to protect jobs, is it better spent on a volatile steel sector, or should it target proven light manufacturing and downstream petrochemical facilities? This reveals an ongoing ambiguity in the country’s overarching natural gas strategy.
Choosing Wisely
Desperation is a powerful motivator, but it makes for a terrible economic advisor. Today, more than ever, T&T must be ruthlessly thorough in its industrial choices.
In the cinematic climax of Indiana Jones and the Last Crusade (1989), the explorer and the villain Walter Donovan stands before a historical collection of dozens of glittering, jewel-encrusted chalices, tasked with identifying the true Holy Grail. Blinded by greed and appearances, Donovan eagerly grabs the grandest, most gold-plated cup. He drinks from it, ages to dust in seconds, and prompts the ancient Grail Knight to dryly observe: “He chose poorly.” Indiana Jones, looking past the flash, chooses the simple clay cup of a carpenter—the asset that actually holds substance.
As our leaders sit at the negotiating tables with private equity firms and flashy new startups promising billions, they cannot afford to be blinded by the industrial glitter. If T&T rushes into heavily subsidized, short-sighted energy contracts out of economic desperation, we will be the ones turning to dust. We must choose wisely.
TT Patriot is the pseudonym of a retired C-suite executive who spent their career working in downstream energy companies
