Steel firm to invest P10.6 billion on 3 billet plants

MANILA, Philippines - Filipino-owned firm New Carcar Manufacturing will be investing P10.570 billion for three billet manufacturing facilities in Luzon,Visayas and Mindanao.

New Carcar is owned by the Yao family, the same people behind SteelAsia Manufacturing Company.

The multi-billion investment has received income tax holiday (ITH) from the Board of Investments (BOI).

New Carcar will build three steel billet manufacturing facilities. One will be in La Union, the other in Cebu and the Mindanao plant will be in Mindanao del Norte.

BOI Executive Director Lucita P. Reyes said the rationale behind the three plants is for easier distribution. “This will make steel billets easily available in Luzon, Visayas and Mindanao.”

The three plants will each cost P3.523 billion to construct. It has a total capacity of 1.2 million metric tonsor 400,000 metric tons per facility.

The steel billets will all be sold to Steel Asia. Currently, the steel billets used by Steel Asia are imported from other countries. New Carcar has a tolling agreement with Steel Asia.

Commercial operations will begin January 2014. It will employ 513 people.

Reyes said this investment will help the Philippines be more competitive because there are many users of steel products in the country.

SteelAsia has another tolling agreement with Harbour Industrial Development Corporation. Under said agreement, among other provisions, Steelasia will provide the raw material like steel billet while the applicant firm will manufacture them into rebars at an agreed tolling fee of P 2,800 per MT.

Harbour invested P1.95 billion for a steel bar manufacturing plant in Davao del Norte. This will be operational in January 2012. The plant will have an annual capacity of 400,000 metric tons.

The Davao plant output is intended for the Mindanao market. The applicant firm is also considering to export around 10 to 20 percent to Manado, the capital of the North Sulawesi province of Indonesia, in the future.

Rebar demand in Mindanao estimated at 400,000 metric ton per year, accounts for around a quarter of the country’s re-bar demand of about 1.8 million metric ton per year.