Steel Asia Manufacturing Corp. on Friday announced a $500-million expansion program that will increase production of wire rods, steel plates and steel sections.
Steel Asia president Ben Yao said the planned expansion was expected to meet increasing demand for steel and support other industries such as shipbuilding.
“The Philippines has become the region’s laggard in terms of steel production. We used to be ahead of everybody else in the region, next to Japan. Our expansion into diverse downstream products will not only improve industry competitiveness but will also stabilize local prices,” he said.
He said Steel Asia was expected to post P29 billion in revenues in 2016, up from P27 billion in 2015. The company booked a profit after tax of P1.5 billion last year.
Yao said the planned investment would involve $200 million for the construction of a wire rod mill in Candelaria Quezon, $200 million for the steel section mill and $100 million for the steel plate mill in Cagayan de Oro City.
The Philippines remains a net importer of wire rods, steel plates and steel sections.
The Candelaria plant, once completed, is estimated to produce up to 600,000 metric tons of wire rods. These rods are used to manufacture nuts and bolts, wire mesh, wire rope springs, industrial machinery and lattice girder.
Steel Asia said the wire rod mill would partly address local demand estimated at 800,000 metric tons annually.
Yao said the company might form a joint venture with strategic partners for the steel plate and steel section mills. He said going public was also on the table.
“This model is not new to us. We had National Steel of Singapore as our strategic partner for our rebar plants in the previous years. But we have since moved on as a wholly-owned Filipino company. For the plates and section mills, we might be getting foreign partners,” said Yao.
The company plans to tap Korean or Japanese technologies for the plates and section mills.
Yao said financing was not a problem for Steel Asia, given its track record of nearly 50 years in the steel business. Most of its processing plants were funded through project financing.
He said while the company was finalizing plans for more downstream processing, it was also pursuing an ongoing capacity expansion for rebar production.
The ongoing construction of the Bulacan and Cebu plants will add another 2 million MT in capacity in three years to the company’s current 2.1 million MT production.
Steel Asia is the country’s dominant player in rebar production with 50 percent share of the market. There are 12 more local players accounting for the remaining 50 percent of the rebar market.