The Grey Chronicles

2008.December.6

51-Year Dream: A Blast Furnace for the Philippines


When I joined National Steel Corporation in 1989, the vision then was for an Integrated Steel Mill! This was NSC’s dream way back in the 1990s, but nothing came of it. During Wing Tiek’s era, a COREX plant was envisioned but still nothing came of it.

From The Philippine Star, 15 May 2006: Steel industry development: RP’s elusive dream.

“The Philippines took its first step towards the integration of the steel industry 51 years ago, yet the country is still a long way from the objective owing largely to faltering policies and lackluster implementation of pertinent laws, rules and regulations.
In his study of the domestic steel industry in late 1993, Ernesto Valencia of the Philippine Center for Policy Studies remarked: "The history of our steel industry has been of failed initiatives, lost opportunities and bureaucratic inefficiency and corruption." In his study, Valencia insinuated that the country missed the boat on the integration issue.
To stir investor interest and ensure the growth of the iron and steel industry President Corazon Aquino enacted on Aug. 8, 1991, Republic Act 7103, also known as the Iron and Steel Industry Act. "

Unfortunately, the incentives offered under R.A. 7103 are good only for 15 years [or, by 2006], by which the grantees were supposed to be operating profitably, and the vision of the law attained. But the hard reality is there’s no light yet at the end of the tunnel toward industrialization. ”

From Larry M. Henares’s book Make My Day, Book 9: Give and Take based on his articles from November 6 to 11, 1989 and November 22-23, 1989, in the Philippine Daily Inquirer:

“According to Tony Arizabal and president Rolly Narciso, the annual demand for finished steel products in the Philippines is 1.5 million metric tons (MT) in 1988; and about 1.9 million MT in 1989.
It takes five years to set up a blast furnace, by which time, at the present rate of growth, Tony and Rolly are sure we have enough demand to justify an economical size plant, some 2.5 million MT/year in crude steel.
Actually the NSC is engaged in backward integration, ushering our economy from dependence on the import of finished steel products, to that of semi-processed steel — slabs and blooms.
A blast furnace with 2.5 million MT/year capacity has a $1.4 billion project cost. Just think what we could have done with the $2.5 billion that we wasted on the nuclear plant!”

From The Philippine Daily Inquirer, 23 May 2007: Global Steel to put up $1.6-B blast furnace

“Global Steel Philippines Inc. — the once-shuttered company formerly known as National Steel Corp. — said it was preparing to build a $1.6-billion integrated steel plant.
The Indian-owned company made the announcement amid allegations that it was using fake export papers because it could not produce goods at its plant in the southern city of Iligan.
Company managing director Lalit Kumar Sehgal said in a news briefing that Global Steel was working on government approvals for the project, which would make the Philippines self-sufficient in steel.”

From The Manila Times, 23 May 2007: Global Steel prepared to put up integrated manufacturing plant

“Lalit Kumar Sehgal, Global Steel managing director, told reporters that the company is investing $1.5 billion for the new facility to be located in its Iligian City compound. He said the project has yet to secure government approval.
"Investing as much as we already did and our further plan to expand is not a joke. We are not selling it to Tata Group, which is our closest competitor in India nor to anybody else," Sehgal said. "The expansion, which will be divided into two phases, is expected to be finished in 2010," he said.”

From The Hindu Business Line, 07 October 2007: Global Steel to set up 3.2 mt plant in Philippines

“Pramod Mittal-promoted Global Steel Holding (GSH) is looking at setting up a 3.2-million-tonne integrated project in the Philippines. The company is looking at an investment of around $1.6 billion (Rs 6,400 crore).
"The formal agreement with the Philippines Government is likely to be signed by December this year [2007] and they have assured us adequate raw material and energy linkage to facilitate the plant," Mr Lalit Kumar Sehgal, Managing Director, Global Steel Philippines, said.
The company proposes to convert its current 1.8 mt hot strip mill into the 3.2 mt integrated steel plant.
He added that the plant would be built in two phases. In the first phase, the brown field expansion would be carried out and during the second, associate works would be carried out. ”


Annotations:

Thus, for 51 years the country had a dream and that dream came in black and white, until it faded into grey! With GSPI’s announcement, I guess the dream came in technicolor. Disbelief has been in the minds of many readers when GSPI announced in 2007 of putting a blast furnace by 2010! That’s about three years then, and about a year from now [December 2008]. Oh, I guess there are some unpublished feasibility study that could put-up a $1.5 or 1.6 Billion-brownfield plant, the capacity of which was never disclosed until October 2007, in less than a year! Was the announcement made only to divert public attention from the Vietnam exports or the Tata Steel rumors? I’m keeping my fingers crossed, or should I keep my eyes closed to continue the dream?


Notes:

Jaurigue, Rolando A. (2006). Steel industry development: RP’s elusive dream. Manila: The Philippine Star 15 May 2006. back to text

Henares, Larry M. Jr. (2006). Make My Day, Book 9: Give and Take. Manila: The Philippine Folio 2006. back to text

Domingo, Ronnel W. (2007). Global Steel to put up $1.6-B blast furnace. Manila: The Philippine Daily Inquirer 23 May 2007. back to text

Manila Times(2007). Global Steel to put up $1.6-B blast furnace. Manila: The Philippine Daily Inquirer 23 May 2007. back to text

The Hindu Business Line(2007). Global Steel to set up 3.2 mt plant in Philippines. New Delhi: 07 October 2007. back to text

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5 Comments »

  1. Hi sir.

    Can we contact u regarding the set up of blast furnace in the Philippines

    Comment by r3dd — 2014.October.31 @ 15:31 | Reply

  2. I believe that MIDREX is a much more energy efficient process that will favorably affect a planned integrated steel mill’s profitability over the long term. It’s primary feature is the use of natural gas as a power source instead of petroleum.

    Comment by GreyAlien — 2009.September.19 @ 02:07 | Reply

  3. Update from Inquirer’s “GSPI’s $1.6-B plan still uncertain”:

    “Global Steel Philippine Inc.’s plan to put up a blast furnace in its steel plant in Iligan City is still in the unseen future as GSPI, according to company officials, is waiting for the government to provide an “enabling platform” for the $1.6-billion project.”

    Comment by reyadel — 2009.March.5 @ 11:11 | Reply


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