"When this is completed, it will make us the largest semi-refined carrageenan producer in the world," said SMC president Benson Dakay.
Currently, SMC is already the biggest exporter of semi-refined carrageenan in the world market, cornering 3,500 metric tons (MT) of the 8,000 MT world market for the commodity. In the US, SMC has an 80-percent market share for semi-refined food grade carrageenan, 60 percent in Europe and 33 percent in South America.
Dakay said the Cebu-based company will be upgrading its plant facilities in Paknaan, Mandaue City as well as its satellite facilities in Zamboanga City in Mindanao.
The three-year plan which starts this year, involves the replacement of outdated machinery and equipment that will substantially bring down the plant’s cost of operations.
The plant’s rated capacity will be increased to 5,500 MT from 3,500 MT while its plant in Zamboanga City will be converted into a food-grade processing plant. Currently, it produces pet food grade carrageenan.
"When all the new equipment and machinery are in place, it will make us more competitive. We expect our processing cost to go down by 47 percent with the improvement in our drying process, and because some of our processes will be mechanized, we will also be saving on labor cost," said Dakay.
Part of SMC’s expansion plans is to scout for new seaweed farming sites.
"We already have small farms in Bicol, Palawan, Sorsogon and Surigao, but we have to find other areas especially when the plant’s upgrade is completed and capacity is expanded," said Dakay.
Dakay said the expansion plan of SMC is being done alongside the company’s 10-year rehabilitation program which involves the payments of more than P2.6 billion in loans to a consortium of commercial banks.
The loans were incurred during the Asian financial crisis of 1997-1998 when SMC’s operations were adversely affected due to its dollar-denominated loans and wild foreign exchange fluctuations.
So far, SMC has paid P265 million out of the P1.6-billion loans. On the other hand, its affiliate company, Shemberg Biotech Corp. has paid P20.3 million out of its P1-billion loan as of August this year.
Dakay is optimistic that despite its debts, SMC will be able to make a complete turnaround, especially since it has established firm markets overseas.
Currently, about 65 percent of all red seaweeds used to make carrageenan in factories worldwide come from coastal reef farms in the Philippines.
SMC which pioneered in the export of the commodity, has become a major player in the value-added production of carrageenan and it accounts for 26 percent of the world’s demand for carrageenan for human consumption and 44 percent of world demand when petfood and industrial grades are included. Exports now exceeds $100 million annually.