Slim: Using local materials for new airport could save US$1bn

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Wednesday, August 1, 2018

The use of local construction materials instead of imported ones to build the new Mexico City international airport would significantly reduce the project's costs, according to tycoon Carlos Slim (pictured).

Speaking in Madrid on Tuesday at an investor's day event organized by construction company FCC, which Slim controls, the Mexican magnate said the move would represent between US$800mn to US$1bn in savings.

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Addressing the three options that president-elect Andrés Manuel López Obrador (AMLO) is proposing for the airport, Slim said that building the project at its current construction site is the best one.

"The objection [to the project] is that it's too expensive," Slim said. "It is very expensive because in addition to its complexity, it [the design by architect Norman Foster] requires imported construction materials. If those were nationally manufactured ... it would cost 10bn pesos less."

The use of local materials would also be beneficial for Mexico's economy, Slim said.

SLIM'S INTEREST

CICSA, the infrastructure unit of Slim's Carso group, and FCC were members of consortiums that won some of the airport's largest contracts, such as the ones for the terminal building and the construction of runway No. 3.

In addition, Slim-owned pension fund manager Afore Inbursa was one of the main investors in the Fibra E securities that were issued to fund construction of the airport earlier this year.

Slim-owned firms currently hold an approximate 14% interest in the contracts awarded to date for the project.

In April, Slim publicly criticized AMLO's proposal to cancel the project, saying that "halting the project means to stop the development of the country."

CONCESSION MODEL

The one thing which AMLO and Slim seem to agree on is the possibility of developing the project under a private concession model instead of building it with public funds.

"I believe it is better that those projects are privately funded, in Mexico and anywhere else in the world," Slim said at the FCC event. "Instead of raising taxes to obtain public works financing, one could use private funds, particularly because this type of project requires multi-year financing and government budgets are yearly-based."

AMLO had previously addressed the multibillionaire's remarks by saying: "If he considers that it is a good business, why doesn't he build it with his own money?"

PROJECT'S FUTURE

A decision on whether to continue construction of the airport is still in the works, with AMLO's infrastructure team currently carrying out technical and financial analysis of the project.

Officially, as it currently stands building the airport would require 250bn pesos (US$13.4bn), although AMLO's future transport minister Javier Jiménez Espriú puts the figure at 285bn pesos.

The results of the audits conducted by the president-elect's team are set to be unveiled in approximately two weeks.

Public debate will subsequently take place through October 15 to discuss the options the leftist leader is proposing, with a public consultation being launched soon after.

The results of that process will provide the new government, which takes office on December 1, with feedback to reach a final decision.