Sustainable Loan: Ternium Mexico's US$1.25bn green loan
Green enabler
Major loans for industrial decarbonisation projects were relatively limited in 2025 as work continued on transition loan principles and even fewer were seen in emerging markets.
However, green steel was able to show clear value by avoiding future emissions from a hard-to-abate sector that will play a key role in enabling the energy transition and a groundbreaking US$1.25bn green loan for Ternium Mexico, a subsidiary of New York-listed Ternium, was signed in late August.
The green loan finances the design, construction, operation and maintenance of a new low-carbon steelmaking facility in the industrial centre of Pesqueria in Nuevo Leon. It is one of the most ambitious green industrial projects in Latin America.
The deal set a benchmark for the application of Green Loan Principles in heavy industry and is an example for regional steel decarbonisation that has the potential to drive systemic change in Latin American industry as global steelmaker Ternium has operations throughout the region.
It is part of a US$4bn investment by Ternium that aims to strengthen Mexico’s industrial base, encourage regional integration and substitute imports with domestic production by producing low-carbon steel with significantly lower emissions intensity.
“To be able to see Latin America taking the lead of these technologies was really fascinating,” said Thatyanne Gasparotto, executive director in Natixis’ green and sustainable financing solutions team for the Americas.
The bank’s green framework outlined several layers, focusing on technology replacement, renewable energy use and carbon capture, as well as the transition from natural gas to green hydrogen when commercially viable.
The loan funds the construction of a direct reduced iron electric arc furnace steelmaking facility, which replaces the need to import slabs from coal-fired blast furnace operations abroad and is expected to cut hot-rolled steel emission intensity by 15% by 2030 for Scopes 1, 2 and 3.
The company will increase renewable energy for the DRI EAF facility to 50% via onsite renewable generation and long-term power purchase agreements and will also use circular economy practices to increase the use of scrap metal and wastewater.
“The challenge was a new sector, new jurisdiction and really combing through what makes a DRI EAF production facility green,” Gasparotto said.
Those measures earned a “medium green” second-party opinion rating from S&P, which indicates significant progress towards low-carbon production, although full decarbonisation depends on green hydrogen adoption.
Natixis was co-green coordinator with BNP Paribas and Credit Agricole CIB, which was also administrative agent for the loan facility. All three banks were also joint leads and bookrunners with Citigroup, Intesa Sanpaolo, JP Morgan and Mediobanca.