The Trade Department will likely approve the proposal of Steel Asia Manufacturing Corp. to acquire, rehabilitate and operate the mothballed mill of National Steel Corp. in Mindanao.
Trade Secretary Ramon Lopez said the government was ready to extend tax incentives to Steel Asia, but would not likely grant tariff protection.
Lopez said the department had not received proposals from other companies over the acquisition of National Steel, aside from that of SteelAsia.
“If their intention [SteelAsia] is to have iron and steel operations [in Iligan], by all means that’s a welcomed move. It has to be a modern facility to be efficient. And the presumption here is that they will enter the market without protection, without tariff protection,” Lopez said over the weekend.
He said despite the lack of tariff shield, the Trade Department’s Board of Investments would assess the proper incentives to be accorded to big investments using modern technology such as the proposal of SteelAsia.
“Steel manufacturing is still a priority industry. We will give [them] incentives particularly if they are putting up a modern plant with modern technology that is efficient and job generating with low production cost that will render operations efficient,” said Lopez.
A possible challenge to the proponent is the current financial standing of National Steel as claims for the property might surface from banks, as the company is still under receivership. It also has tax arrears.
SteelAsia officials said they were willing to work out a plan with the government to make the proposed acquisition a win-win project for both entities.
There are several proposals to develop the iron and steel industry including a standing proposal by a Chinese group to put a $10-billion integrated steel plant.
SteelAsia plans to put up a modern and environment-friendly factory in Iligan, producing steel products like plates, beams, billets, slabs and sheet piles which are all currently imported.
Under the proposal to National Development Co., SteelAsia is prepared to negotiate with all valid claimants, including the government, for an asset-purchase arrangement.
If the plan works out, Iligan will be SteelAsia’s seventh steelworks unit. Its six steelworks, located in key growth regions throughout the country, are all operating at full capacity.
SteelAsia is the largest reinforced steel bar maker in Southeast Asia and the Philippines.
SteelAsia president Benjamin Yao said the plan was to produce and deliver quality steel products enough to supply the rising local demand from a growing infrastructure sector of a fast industrializing country.
“We grew exponentially in the past ten years, starting with a production capacity of 450,000 metric tons in 2006 to 2.7 million metric tons in 2016 for rebars and billets. We are putting up new ones in the next two years to bring up our capacity to 5 million metric tons, which will be 60 percent of total annual demand,” Yao said.
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