The Grey Chronicles

2009.May.20

How Responsible is the Responsible Media?



In a previous post, 20 Things You Might Not Know About the Internet, Part II, it highlighted the Attack of the Internet-Biters, which deplored that the Internet became an unrestricted mushrooming of amateur content overwhelming professionals, responsible media; or unreliable information available; and the dumbing-down effect on culture caused by “twittering.”

Last 18 May 2009, Malaya, The National Newspaper, published a news article written by Irma Isip (2009):

“Global Steel Industries Philippines (GSPI) has received offers from several parties for the acquisition of its Iligan steel mill, according to Trade secretary Peter B. Favila. . . Favila said the plant has been operating “on orders” because of poor market conditions and falling steel prices. . . He added the interested parties are local groups with joint venture partners who are keen on acquiring the entire facility. .. Favila said he told the GSPI officials that “if there’s an opportunity, you should explore it.”

Isip, being part of the purportedly responsible media, only rehashed all the previous problems GSPI faced, such as:

unpaid real estate taxes with the local government of Iligan. . . Favila said the company has yet to secure the title for the property where the facilities of the GSPI are sitting on.”

The Manila Times (2005) in a three-part special report states “GSII has yet to pay the Iligan City government some P177 million in real-property taxes alone”.

the property remains mortgaged with the banks. GSPI incurred P2 billion worth of obligations in the form of real property taxes from 1999 to present but the company questioned the amount saying, it only took control of 10 percent of the facilities owned by National Steel Corp. and should not shoulder all the obligations.”

Never knew how this 10 percent was derived from? Meaning the plant facilities consisting of 1.7-million metric tons per year [Mtpy] hot strip mill, 1.0-Mtpy cold strip mill and 0.320-Mtpy electrolytic tinning lines of NSC only amounted to 10% of its total plant facilities? The only facilities presently NOT under GSPI’s control is the Billet Steel Plant [BSP]. In terms of primary (hot strip and billet) production capacity, BSP amounts to only 0.30-Mtpy. Applying simple arithmetic when it acquired NSC, GSPI controlled 85% of the 2.0-Mtpy rated capacity of NSC!

piled up debts with Napocor.

Isip failed to state how much GSPI owed Napocor. GSPI’s electric Power was cut-off last 01 June 2008 at 15:00H because of failure to pay outstanding accounts. But it was never reported in the local news. In 2006, the average monthly power bill for GSPI was estimated at PhP 47 Million, based on a consumption of about 12.7 kWh per month at Php3.79/kWh. If, for arguments sake, GSPI piled up debts for four years this would amount to PhP 2.256 Billion! Now, compare this figure to NSC’s 55.3 GWh, maximum allowable energy consumption per year at PhP 1.432/kWh?

seeking a guarantee from the Philippine Export-Import Bank for a $20-million loan it was securing from various banks to purchase raw materials.”

The Philippine Star (2007) reported as early as June 2007 that “it remains unclear which bank the company will borrow from, the sources added. Global Steel currently has loans from several local banks including the Philippine National Bank, Metropolitan Bank and Trust Co. Land Bank of the Philippines, China Banking Corp. and Rizal Commercial Banking Corp.”

Annotation: This particular loan from the bank consortium is the P13.25 billion for the acquisition of NSC to be paid over an eight-year period until 2012 under a negotiated schedule. Incidentally, where have GSPI’s mantra: money is no object!, gone? Why is it seeking a guarantee from Phil Ex-Im Bank? The theory behind is that the bank consortium have learned their financial lessons from the Malaysians experience. And they thought GSHL is any better than the latter?

Thus, of the 17 paragraphs of news article, mostly containing single sentences each, only six were new! Isip also perpetuated giving misinformation which this blog previously addressed, such as:

“It has rehabilitated and reopened the hot rolled and cold rolled mills which produce the basic flat and long [sic] steel products.”

The facilities GSPI rehabilitated starting 2004 is ONLY capable of producing flat products. Long products are produced by the former NSC Billet Steelmaking Plant, which is NOT under GSPI management but rather on lease by GSPI to Treasure Steel Corporation, a subsidiary of TKC Steel. GSPI only has control over hot-strip and cold-strip mills, and this facilities do not include a casting machine needed to produce long products, such as billets, rods, blooms, etc.

Global Steel Holdings Ltd., the umbrella company managing GSPI, has a steel capacity in excess of 14 metric tons [sic] in six plants spread across the world. A;art [sic] from the Philippines, it has plants in Bosnia, Bulgaria, Libya, Nigeria and India.”

The same with other reporters, Isip made a grave technical error! The weight of one (1) 1100PIW hot-rolled coil [HRC] is about 18 metric tons. One metric ton is equivalent to 1000 kilograms or 2204.623 pounds. If GSHL produces only 14 metric tons in six plants, then why bother acquiring all these plant capacities when a typical modern steel mill could produce one (1) coil of 18 metric tons operating for a few minutes! Incidentally, prior to its closure, NSC’s hot mill capacity was about 1.7 Million metric tons [Mmt], or a primary capacity of 2.0 Mmt and for the whole of the Philippines cold-rolled steel capacity in 2000 was about 1.4 Mmt.

This is also reminiscent of Estopace and Mugas’ Special Report (2005a), stating:

“[T]he GSII’s parent firm, the Ispat Group of Companies, controls about 52 percent [sic] of the world’s total steel production, according to worldwide estimates. The Ispat group operates and manages 14 million tons [sic] of steelmaking capacity in the Philippines, Libya, Nigeria, India (including Ispat Industries in India) and Bulgaria.”

World Steel in Figures 2006Annotation: At least Estopace and Mugas got the capacity of 14 million tons right, not what Isip wrote at 14 metric tons. IISI (2006) reports that the world steel production in 2005 totaled at 1,132 million metric tons [Mmt]. Mittal Steel, the top spot, produced 65.0 Mmt and Global Steel was nowhere in the top 80 producers. Only in the re-issue of the World Steel in Figures (2007), which revised the 2005 world steel production to 1,142 Mmt, that Global Steel Holdings was credited with 2.9 Mmt to place 86th. If Mittal Steel amounted to only 5.5% and even the top 40 companies combined only produced 53.68% of the world’s total, is it not a blatant and unadulterated misinformation that GSHL controls about 52% of the world’s steel? It does not own all the other 39 companies in the bottom of the top 80 steel-producing companies! The truth is: Global Steel Holdings is only a minor player at 0.254% share of the world’s steel production in 2005!

If Isip cared for some research, instead of just obviously quoting other published news reports, she should have read about LiveMint (2008) report in 18 April 2008:

“A fortnight ago, the new Nigerian government cancelled Global Steel’s contract to run a steel plant and mine iron ore in the country’s central region that had been issued by the earlier government.”

Or this one from Sofia Echo’ press release in April (2008) :

“Pramod Mittal, the majority-owner of Bulgaria’s biggest steel mill Kremikovtzi, has asked his older brother Lakshmi “to help him” with investments in Bulgaria and Nigeria, the Sunday Times reported.”

I thought news reports are based on substantiated facts. Isn’t that the essence of journalism? Or Isip should rather stick to “twittering”?


Notes:

Bivol, Alex (2008). Pramod Mittal ready to sell Kremikovtzi to brother Lakshmi -report, Online: Sofia Echo, 14 Apr 2008. back to text

Estopace, Dennis D. & Niel V. Mugas (2005). Special Report: Govt rules bent for Nat’l Steel owners. Online: The Manila Times, 30 May 2005. back to text

Estopace, Dennis D. & Niel V. Mugas (2005a). Special Report: Whitewash feared in exposé. Online: The Manila Times, 31 May 2005. back to text

Handique, Maitreyee (2008). Global Steel workers in Libya too say they are owed money, Online: LiveMint, 18 April 2008. back to text

International Iron and Steel Institute [IISI] (2006). World Steel in Figures 2006. Brussels, Belgium: International Iron and Steel Institute, 2006. p. 2. back to text

International Iron and Steel Institute [IISI] (2007). World Steel in Figures 2007. Brussels, Belgium: International Iron and Steel Institute, 04 September 2007. p. 3. back to text

Isip, Irma (2009). Global Steel gets offers for Iligan mill, Online: Malaya – The National Newspaper, 18 May 2009. back to text

Osorio, Ma. Elisa P. (2007). Global Steelworks needs additional loans, Online: LiveMint, 18 June 2007. back to text

Disclaimer: The posts on this site does not necessarily represent any organization’s positions, strategies or opinions; and unless otherwise expressly stated, are licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Philippines License.

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