SteelAsia’s PHP65-B Gamble: The Future of Philippine Steel

COURTESY: https://www.pna.gov.ph

Hey there, steel enthusiasts! Big news is brewing in the steel industry, and it’s all about SteelAsia Manufacturing Corp. If you’re not familiar, SteelAsia is the biggest steelmaker in the Philippines, and they’re making some bold moves. Imagine this: a whopping PHP65 billion investment to build four new production facilities in Luzon and Mindanao. That’s right, folks, 65 billion pesos! This massive investment is set to create around 3,000 direct jobs over the next three to four years. Sounds like a win-win, right?

In a recent briefing in Compostela, Cebu, SteelAsia’s chair and CEO, Benjamin Yao, shared the company’s ambitious plans. They aim to supply at least 70 percent of the local steel demand, a significant leap from the current situation where 86 percent of the country's steel needs are imported, primarily from Vietnam. Right now, SteelAsia focuses on making reinforcement bars (rebars), but that’s about to change in a big way.

Let’s dive into the nitty-gritty of their strategy. SteelAsia’s senior VP for business development, Rafael Hidalgo, spilled the beans on the specifics. The new plants will stretch across Candelaria in Quezon Province, Davao, and Concepcion in Tarlac. These aren’t just any plants; they’re set to manufacture products that the Philippines currently doesn’t produce, like H-beams, I-beams, wire rods, sheet piles, and billets. Exciting times ahead!

The Candelaria plant is particularly noteworthy. It will focus on heavy sections like H-beams and I-beams with a rolling capacity of 750,000 metric tons (MT). Meanwhile, the Davao Meltshop will churn out 500,000 MT of billets, a semi-finished material essential in steel production. Both facilities are slated for commissioning by 2026. The Concepcion lines will add another 1.2 million MT of rebar output and 500,000 MT of wire rod, with operations expected to kick off in 2027. That’s quite the lineup!

Currently, the Philippines is heavily reliant on steel imports. Hidalgo pointed out that the country imports 66 percent of its good steel requirements. We’re talking about zero production of sections, wire rods, and hot roll coils. The National Steel Corp. (NSC) used to produce these, but since its closure, the gap has only widened. This heavy dependence on imports has stifled the growth of the downstream industry, affecting everything from machinery parts and defense equipment to everyday items like welding rods and utensils.

SteelAsia’s new plants will boost the country’s current capacity from 3 million MT to nearly 6 million MT, adding an impressive 2.95 million MT. “With this, we will have 70 percent self-sufficiency in steel. I think we can say that we’ll have a steel industry already,” Hidalgo confidently stated. This is a game-changer, folks. It’s not just about meeting local demand; it’s about fostering a robust steel industry that can propel the nation’s economic growth.

Now, you might be wondering, what about government support? Well, SteelAsia’s executives recently presented their investment plan to Department of Trade and Industry (DTI) Secretary Alfredo Pascual, who was all ears. Pascual hailed the plan as an import substitute strategy aligned with the Tatak Pinoy (Proudly Filipino) Act. He emphasized that the government is fully behind this initiative, offering incentives and financing through government financial institutions.

Moreover, SteelAsia is on the lookout for foreign investors to partner with for these new plants. Pascual noted that these projects are attractive to foreign players, given the existing market. “This is something that we will truly support… The government will provide the enabling environment for the private sector, the incentives, financing through government financial institutions. The private sector, the entrepreneurs do the projects,” Pascual assured.

So, there you have it. SteelAsia’s PHP65 billion investment isn’t just a financial move; it’s a visionary step towards a self-sufficient and thriving steel industry in the Philippines. With new plants, job creation, and government backing, the future looks incredibly promising. It’s more than just catching up; it’s about reinventing the steel landscape in the country. Stay tuned, because the steel industry in the Philippines is about to get a whole lot hotter!