SteelAsia allots P80B for expansion

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STEELASIA Manufacturing Corp. is spending P80 billion through 2023 to hike its production of billets and rebars, and eventually establish the first local plant that will manufacture wire rods and sections — much needed products in establishing a steel industry.

SteelAsia is allocating P25 billion for the first phase of its six-year expansion plan, which covers the establishment of three integrated steel making facilities, as well as the development of a hot rolling mill for rebars, wire-rods and sections.

The sections, which are beams and sheet piles, are used for infrastructure projects, while wire-rods are mainly used for industrial sectors.

“These kinds of products are the missing links to industrialization,” SteelAsia Vice-President for Corporate Development Rafael C. Hidalgo told reporters on Tuesday in Makati City.

He noted the local market uses imported sections mostly from South Korea, China, Taiwan, Thailand and Japan, while wire-rods are mainly from China.

Under the first phase of the expansion plan, SteelAsia is building two wire-rod facilities, one with 800,000 tons capacity in Compostela, Cebu, and another with 1.2 million tons capacity in Concepcion, Tarlac. It is also setting up a plant that can produce 500,000 tons of sections in Lemery, Batangas. The Compostela facility is expected to be completed by 2019, while the plants in Concepcion and Lemery will be finished by 2020.

“They have capacity for future demand,” Mr. Hidalgo said.

For rebars, local demand is expected to reach 4.5 million tons by 2021; while wire-rod demand is at around 600,000 tons; and demand for sections at 700,000 tons.

With the six-year expansion plan, Steel Asia, the biggest rebar producer in the country, expects its output capacity to increase to 4.5 million tons. This is nearly double its current capacity of 2.3 million tons which is produced at five of its six existing plants.

At present, Steel Asia’s plants are located in Bulacan, Batangas, Cebu Misamis Oriental, and Davao City.

“The expansion is going to be in other regions,” SteelAsia President Adrian Cristobal, Jr. told reporters.

“The strategy is to go with the archipelago. The growth will spread out. The job generation is also at the rural level,” Mr. Cristobal said, adding that 80% of its workers live in the rural areas.

By the end of the six-year plan, SteelAsia said the firm’s capacity of finished steel products will hit 7 million tons and steel-making products such as billets and blooms at 4.3 million tons.

The country’s lone billet producing facility is located in Batangas. Billet is a raw material needed in rolling rebars. At present, the firm produces 500,000 tons of billet.

Increasing its production of the product is expected to reduce the country’s dependence on imported billets which now stands at 80%. SteelAsia expects to be at least 50% to 70% self-sufficient on billets after the six-year program.

Benjamin O. Yao, SteelAsia chairman and CEO, is bullish on the prospects of a vibrant local industry in the next five years. — Janina C. Lim