A P65 billion investment by SteelAsia Manufacturing is seen to revive the Philippines' steel industry, which is critical in transforming the country into one of the world's economic powerhouses.
The country's ailing steel industry is getting a restart.
The country's largest steelmaker, SteelAsia Manufacturing Corp., said it would invest P65 billion to construct four production facilities in Luzon and Mindanao, rebuild the nation's once flourishing steel industry, and create 3,000 jobs within the next three to four years.
SteelAsia chair and chief executive officer Benjamin Yao said that upon completion, the company could supply at least 70% of the domestic steel demand. Currently, 86% of the country's steel needs are imported, mainly from Vietnam, with SteelAsia only making reinforcement bars (rebars).
"It's never too late. We will catch up in the next three years," Yao said and added the new facilities will produce steel products that are not yet being manufactured in the country, such as H-beams, I-beams, wire rods, sheet piles, and billets.
Doubling capacity
SteelAsia senior vice president for business development Rafael Hidalgo disclosed that the four new plants will be in Candelaria in Quezon Province and Davao, and two in Concepcion, Tarlac.
Hidalgo said the Candelaria plant will manufacture heavy sections like H-beams and I-beams with a rolling capacity of 750,000 metric tons (MT). The Davao Meltshop will manufacture 500,000 MT of billets, a semi-finished material used in steel production.
Both facilities are targeted for commissioning by 2026.
The two production lines in Concepcion will increase SteelAsia's rebar output by another 1.2 million MT and manufacture 500,000 MT of wire rods. Operations are planned for 2027.
Earlier, SteelAsia announced that it would invest P18 billion in its Lemery, Batangas plant. The plant will have a 500,000 MT production capacity of medium-section steel products and will be commissioned by the end of next year.
These new plants coming online will increase SteelAsia's current capacity of three million MT to nearly six million MT, adding 2.95 million MT.
"With this, we will have 70% self-sufficiency in steel. I think we can say that we'll have a steel industry already," Hidalgo said.
Hidalgo added that the country has missed many economic opportunities because it needs a supply chain.
"We must import 66% of our good steel requirements or billets. The Philippines has zero production of sections today and zero production of wire rods, and we import 800,000 tons of wire rods every year. We had zero plate production when the National Steel Corp. (NSC) closed. Zero production of hot roll coil also, which NSC used to produce," he said.
"Because we don't have these, we do not have the downstream industry. We do not have machinery parts, defense equipment, or wires. We import our welding rods today. We have so many welders, but we don't have welding rods," he added.
He cited that 92% of the country's roofing demand is imported. Steel cables, pipes, gas cylinders, appliance bodies, and even smaller items like springs, spoons, and forks are outsourced.
"We are import dependent," Hidalgo said. "But as my boss said, it's not too late. All we have to do is build a significant part of the steel industry in the next three to four years."
The Philippines used to be a significant steel export, with the Iligan-based NSC cornering 62% domestic market share for flat steel products and exporting 40,000 metric tons of steel annually to China, Indonesia, and the US until 1994,
The late President Fidel Ramos privatized the NSC and sold it to a Malaysian firm, Wing Tiek Holdings, which mismanaged the company and forced it to close down.
Gov't support
SteelAsia's executives presented their PHP65-billion investment plan to Department of Trade and Industry (DTI) Secretary Alfredo Pascual, who visited SteelAsia's production line in Cebu.
Pascual welcomed the investment plan, calling it an import substitute strategy, supporting the Tatak Pinoy (Proudly Filipino) Act.
While SteelAsia is looking for foreign investors to partner to establish these new plants, Pascual said these projects are attractive to foreign players.
"Here, we know there is a market already," he said.
"This is something that we will truly support… The government will provide an enabling environment for the private sector and incentives and financing through government financial institutions. The private sector, the entrepreneurs do the projects," the trade chief said.
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