Ternium's green loan helps finance one of Latin America's most novel decarbonisation projects, contributing to a landmark in Mexico's energy transition and an example for how green loan principles can apply to heavy industry.

Proceeds under Ternium's Green Financing Framework are exclusively allocated to the design, construction, operation and maintenance of the Direct Reduced Iron–Electric Arc Furnace (DRI–EAF) steelmaking facility at the Pesquería Industrial Center in Mexico.

Eligible expenditures include capital investments, operating costs and research and development activities directly linked to the project's decarbonisation objectives.

Unlike conventional methods, the DRI-EAF route uses natural gas, with "future compatibility" for green hydrogen, combined with electric arc furnaces capable of incorporating high levels of recycled scrap, the issuer said.

The loan was coordinated by Natixis CIB and BNP Paribas, and the financing framework received a 'medium green' rating under S&P Global's Shades of Green methodology.

One judge noted that the loan finances the construction of "one of Latin America's most impactful industrial decarbonisation projects using a robust, independently reviewed framework that channels all proceeds into a technology expected to cut steelmaking emissions by over 60%".