A comment from a Reader solicited my contact email address, which I don’t necessarily give out. For purposes of clarifying the matter, part of the the exchange of emails between 01 to 06 March is published below which might also enlighten other readers of this blog.
[Sunday, March 1, 2009, 6:14 PM] Reader: “I am actually a graduating student, an Accountancy student, we’re having a feasibility study and we chose steel (specifically steel Rebars) as our product for our business. Well, I am lucky that I got to know more about NSC because of ur articles. But I am confused if Global Steel still manufactures steel billets. Do you have idea if their Billet Steelmaking Plant is still in operation?”
Global Steel Philippines do not produce billets. It manufactures coils: hot-rolled coils [HRC] and cold-rolled coils [CRC]. Coils are the raw materials for G.I. sheets, refrigerator sidings, tin cans, milk cans, crown caps, etc. Billets are the raw materials for nails, rods, bars, etc.
Unfortunately, when the Indians came to the Philippines and “bought” NSC they sub-let NSC’s Billet Steelmaking Plant [BSP] to Chinese investors. Today, BSP is being managed by Treasure Steel Co [TSC]. Yes, they are still operating, and from the looks of it: the operation is thriving because as recent as last year they wanted to build the first blast furnace [which is a counter proposal to what GSPI was planning, too!]
Thus, if you want information about the fate of the previous NSC’s BSP, now known as Treasure Steel Co [TSC], then a web search might prove enlightening.
[Sunday, March 1, 2009, 6:14 PM] Reader: “I am actually trying to search if Billet Manufacturers in Philippines like TSC, CAPASCO and SKK have enough capacity to support the operation of other Steel Manufacturers of Rebars, because based on our interviews and other articles we’ve read, they are more dependent on imports.”
From my personal study of the Philippine steel industry, every steel manufacturer in the Philippines is steel import-dependent because our country doesn’t have the required volume of raw materials (coal, iron ore, etc.) to produce slabs for HRC or blooms for billets; much less a blast furnace to produce the latter.
In the Philippines, in most cases, what these steelmaking companies are melting came from the scraps of steel materials, which were imported in the first place. Also, our scrap retrieval here in the Philippines is very minimal.
Maybe you could also try to research about the Philippine Steel Intensity. This indicator is also important in any steel industry study such as yours.
[Wednesday, March 4, 2009 2:47 PM] Reader: “Thank you for that informative message. I appreciate it a lot. I would like to ask again if even before TSC bought this billet-making plant from NSC, have they ever been engaged with billet making? I mean, is TSC manufactures only Steel Pipes before they acquired the BSP?”
From news reports on TSC, the Chinese owner stated that their expertise is in rebars. TSC belongs to the JTKC group of companies. JTKC also means John Tiu Ka Cho, refer to this article in Business Mirror. Or the PSE page. Its own website, however, is so simple that there are other things a researcher would want to make good judgment of the information it contains. Also refer to Iligan City community web site.
Wednesday, March 4, 2009 2:47 PM Reader: “One more thing sir, from your own point of view, (your option sir if you would like to answer for I know you’re a busy man) what do you think are the pros and cons in penetrating the steel industry? Why do you think there are only few companies here in our country engaged in this kind of industry aside from the required high cost of investment, fluctuating prices of raw materials and low resources of coal, iron ore, etc. What do you think are the risks need to be considered?”
You already named three of the risks, but you forgot the environmental risks involved. Any steel industry plant considers this particular risks with respect to the local populace where it wants to operate. Fortunately, the Philippines have already enacted the Clean Air Act, and other environmental laws, but unfortunately the law is not strict about its provisions. Another thing is the risk of obsolescence, although the Philippines is in South East Asia, which has spare parts suppliers nearby, steel companies bought used equipment from either U.S. or Europe, and thus component parts are also sourced from there [consider freight, transport, custom duties, and all that]. Also consider, although not a risk but a necessity, the sourcing of utilities: cheap power and water are basic requirements in steel making, as well as steel manufacturing , and access to infrastructure, such as ports, sea lanes, highways; without these it would be too costly to transport from plantto customer.
Most of the pros and cons of running a steel manufacturing plant were also included in my SWOT analyses. Although it applied to GSPI, the basics are there, and from that you could form an informed conclusion.
[Wednesday, March 4, 2009 4:23 PM] Reader: “It was really true that Global Steel planned to have the first blast furnace.$1.6 billion investments to build the country’s first integrated steel mill was the original plan, but I am curious what happened with that plan? Also, there are lot of rumors before during the latter part of 2007 that GSPI is in the midst of financial bankruptcy.”
In a sense, yes. Kindly refer to my blog: 51-Year Dream: A Blast Furnace for the Philippines. As to GSPI’s blast furnace plan, I discovered that as early as July 20 (Domingo, 2008), it is uncertain as the Indian owners wanted some prerequisites such as mining rights in the Philippines, or what they called “enabling platform”. Or maybe they have spoken too soon, or was this $1.6B investment only to divert attention from the anomalies being hurled unto GSPI prior to their announcement? The GSPI’s plan to put up the blast furnace was announced when PGMA visited India sometime that year.
[Wednesday, March 4, 2009 4:23 PM] Reader: “I would like to clarify if the Billet Steel Making Plant was fully purchased by the TSC or is it being merely leased to TSC? ”
I believe the [operative] word would be “lease”. When GSHL signed the asset purchase agreement with NSC, GSHL bought the entire NSC plantilla. Probably because GSHL doesn’t have the technical know how on running the BSP, it was leased to another company, TSC. Although conflicting reports have been published in the papers, saying TKC owns NSC or what not, these are really baseless, or incorrect reporting.
[Wednesday, March 4, 2009 4:23 PM] Reader: “And what happened with the plan of TSC, based on the articles, they expected the blast furnace to be operational by the latter part of 2008. Are they still in the process of constructing this project? ”
Unfortunately, I don’t have the exact information regarding Treasure Steel Co., as I am not connected to that company. What I do know about TKC’s Blast Furnace plan is through the newspapers and from seeing what is happening over there. I suppose the plan is being attended to there, but I don’t see any ground breaking on their side!
Same with GSPI’s plan, TKC plan as also announced in 2007. GSPI envisioned that its furnace will be operational by 2010, meanwhile TKC said its own furnace operational by 2009. Unfortunately, even with a brownfield project [meaning, upgrading of existing facilities to blast furnace configuration; as opposed to a greenfield project, that is, starting from scratch, zero or nada), it would certainly take about five years or so depending on financial and technical capability of the company. [There] might be that somewhere over in the Caribbean or Isle of Manx, they have some stashed gold bullions to cash in or they have some “hidden wealth” [or laway lang ang puhunan, read this] to tap into.
Notes:
The reader was asked that the exchange of emails was to be posted to this blog, if [the reader] did not mind! Well, the reader is graduating after successfully defending their feasibility study. Congratulations!, I said; and the reply was: “Yes! I am graduating this March!”
Domingo, Ronnel (2008). GSPI’s $1.6-B plan still uncertain. Manila: Philippine Daily Inquirer, 20 July 2008. Online, accessed 04 March 2009. 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.
The Grey Chronicles
To Clarify Matters . . .
Tags: 'Global' Chronicles, Asset Purchase Agreement, Billet, Billet Steelmaking Plant, Blast Furnace, Brownfield, BSP, Chinese, Clean Air Act, Cold-rolled coil, Commentary, CRC, Email, Environment, Global Steel, Greenfield, GSHL, GSPI, Hot-rolled coil, HRC, Iligan City, Import-dependent, India, Infrastructure, John Tiu Ka Cho, JTKC, Mining Rights, NSC, Parts, PGMA, Philippine Stock Exchange, Philippines, Project, PSE, Raw Material, Rebars, Risks, Scraps, Spares, Steel Industry, Steel Intensity, Steel Making, Steel Manufacturing, SWOT analyses, Treasure Steel Co, TSC
A comment from a Reader solicited my contact email address, which I don’t necessarily give out. For purposes of clarifying the matter, part of the the exchange of emails between 01 to 06 March is published below which might also enlighten other readers of this blog.
Global Steel Philippines do not produce billets. It manufactures coils: hot-rolled coils [HRC] and cold-rolled coils [CRC]. Coils are the raw materials for G.I. sheets, refrigerator sidings, tin cans, milk cans, crown caps, etc. Billets are the raw materials for nails, rods, bars, etc.
Unfortunately, when the Indians came to the Philippines and “bought” NSC they sub-let NSC’s Billet Steelmaking Plant [BSP] to Chinese investors. Today, BSP is being managed by Treasure Steel Co [TSC]. Yes, they are still operating, and from the looks of it: the operation is thriving because as recent as last year they wanted to build the first blast furnace [which is a counter proposal to what GSPI was planning, too!]
Thus, if you want information about the fate of the previous NSC’s BSP, now known as Treasure Steel Co [TSC], then a web search might prove enlightening.
From my personal study of the Philippine steel industry, every steel manufacturer in the Philippines is steel import-dependent because our country doesn’t have the required volume of raw materials (coal, iron ore, etc.) to produce slabs for HRC or blooms for billets; much less a blast furnace to produce the latter.
In the Philippines, in most cases, what these steelmaking companies are melting came from the scraps of steel materials, which were imported in the first place. Also, our scrap retrieval here in the Philippines is very minimal.
Maybe you could also try to research about the Philippine Steel Intensity. This indicator is also important in any steel industry study such as yours.
From news reports on TSC, the Chinese owner stated that their expertise is in rebars. TSC belongs to the JTKC group of companies. JTKC also means John Tiu Ka Cho, refer to this article in Business Mirror. Or the PSE page. Its own website, however, is so simple that there are other things a researcher would want to make good judgment of the information it contains. Also refer to Iligan City community web site.
You already named three of the risks, but you forgot the environmental risks involved. Any steel industry plant considers this particular risks with respect to the local populace where it wants to operate. Fortunately, the Philippines have already enacted the Clean Air Act, and other environmental laws, but unfortunately the law is not strict about its provisions. Another thing is the risk of obsolescence, although the Philippines is in South East Asia, which has spare parts suppliers nearby, steel companies bought used equipment from either U.S. or Europe, and thus component parts are also sourced from there [consider freight, transport, custom duties, and all that]. Also consider, although not a risk but a necessity, the sourcing of utilities: cheap power and water are basic requirements in steel making, as well as steel manufacturing , and access to infrastructure, such as ports, sea lanes, highways; without these it would be too costly to transport from plantto customer.
Most of the pros and cons of running a steel manufacturing plant were also included in my SWOT analyses. Although it applied to GSPI, the basics are there, and from that you could form an informed conclusion.
In a sense, yes. Kindly refer to my blog: 51-Year Dream: A Blast Furnace for the Philippines. As to GSPI’s blast furnace plan, I discovered that as early as July 20 (Domingo, 2008), it is uncertain as the Indian owners wanted some prerequisites such as mining rights in the Philippines, or what they called “enabling platform”. Or maybe they have spoken too soon, or was this $1.6B investment only to divert attention from the anomalies being hurled unto GSPI prior to their announcement? The GSPI’s plan to put up the blast furnace was announced when PGMA visited India sometime that year.
I believe the [operative] word would be “lease”. When GSHL signed the asset purchase agreement with NSC, GSHL bought the entire NSC plantilla. Probably because GSHL doesn’t have the technical know how on running the BSP, it was leased to another company, TSC. Although conflicting reports have been published in the papers, saying TKC owns NSC or what not, these are really baseless, or incorrect reporting.
Unfortunately, I don’t have the exact information regarding Treasure Steel Co., as I am not connected to that company. What I do know about TKC’s Blast Furnace plan is through the newspapers and from seeing what is happening over there. I suppose the plan is being attended to there, but I don’t see any ground breaking on their side!
Same with GSPI’s plan, TKC plan as also announced in 2007. GSPI envisioned that its furnace will be operational by 2010, meanwhile TKC said its own furnace operational by 2009. Unfortunately, even with a brownfield project [meaning, upgrading of existing facilities to blast furnace configuration; as opposed to a greenfield project, that is, starting from scratch, zero or nada), it would certainly take about five years or so depending on financial and technical capability of the company. [There] might be that somewhere over in the Caribbean or Isle of Manx, they have some stashed gold bullions to cash in or they have some “hidden wealth” [or laway lang ang puhunan, read this] to tap into.
Notes:
The reader was asked that the exchange of emails was to be posted to this blog, if [the reader] did not mind! Well, the reader is graduating after successfully defending their feasibility study. Congratulations!, I said; and the reply was: “Yes! I am graduating this March!”
Domingo, Ronnel (2008). GSPI’s $1.6-B plan still uncertain. Manila: Philippine Daily Inquirer, 20 July 2008. Online, accessed 04 March 2009. 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.
Share this: