DTI: Iligan Integrated Steel Project remains Investor’s Call

BUSINESS
By Mike Baños
June 3, 2019

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ILIGAN CITY - The City of Iligan may now hold the property rights to the defunct National Steel Corporation plant but the decision to push through with the buyout of what was once the country’s largest steel manufacturing plant remains with its potential investors.
    
“The investment decision is not with the government. Technically, the investment decision rests with the private sector because if they succeed, they will profit. And if they fail, they will take their losses,” said Ruel B. Paclipan, Lanao del Norte provincial director for the Department of Trade and Industry (DTI) during the open forum portion of the official launch for the 28th Mindanao Business Conference held May 22, 2019 at Robinsons Place Iligan.
    
Two years ago, the Iligan City government assumed full ownership of the defunct National Steel Corp. (NSC) plant in November 6, 2017 after the liquidator failed to redeem the company’s real properties of over  P5 billion real property back taxes owed to the LGU following the expiry of the one-year period prescribed by the city treasurer’s office.
    
Iligan City acquired all NSC assets including lands, buildings, machineries, facilities, equipment, tools, scrap, parts, etcetera by virtue of a Tax Deliquency Auction Sale last October 19, 2016. 
    
The NSC plant shutdown for the last time in l999 but the litigation on its liabilities continued after foreign investors Wing Tiek, Ho Tiek and Global Steel/Mittal assumed ownership in succession while the real properties were placed by the company under a liquidator.
    
Iligan Vice Mayor Jemar L. Vera Cruz revealed during the same launch the LGU is now in the thick of negotiations with Australian, Korean and Chinese investors who expressed interested in reviving the NSC plant.
    
 “We have to agree first on the price the investor will pay for the back taxes NSC owes the city government and then hopefully we can close the deal with them,” Vera Cruz said.
    
“Personally, I am  not very keen on the Chinese group because their offer is too small. The Iligan City local government had three primary considerations in selecting an investor: employment for Iligan residents, protection for our environment, and a deal that would be advantageous to our people of Iligan.”
Downstream Industries
    
Meantime, Paclipan said other than the NSC,  interested investors can also avail themselves of other steel and iron industries in Iligan.

“Our advantage in Iligan is as the Industrial Capital of Northern Mindanao we already have experience in the steel industries and can deal accordingly with large and medium industries.
    
Other than the basic steel and iron manufacturing which can be accommodated in the NSC facility, our downstream industries in steel and metals can be easily developed in Iligan. We were already starting to develop this during the late 90s but ran into some problems.”
    
Paclipan said the technical working group assisting the LGU in the NSC negotiations is also looking into the possibility of inviting not just the basic industries, but also the downstream industries for steel and metalworking.
Investment considerations
    
Potential investors for NSC would also be looking at the bigger regional and international markets instead of purely the domestic market.
    
“If you are an investing company, you will look at the whole market, not only in the Philippines, but the entire iron and steel industry in the context of Southeast Asia. Thus matters of under or overcapacity would be a major consideration of the investors once they decide to enter the market,” Paclipan noted.
    
Demand for steel in the Philippines is seen to rise 5-6% in 2019 to a record 11.1 million tons, Roberto M. Cola, president of the Philippine Iron and Steel Institute, said in an interview with Reuters.
    
Last year steel consumption soared 9% to a record 10.5 million tons, with over 70% coming from China.
    
The country’s reliance on steel imports is expected to drop significantly once the $4.4 billion integrated steel project by HBIS Group, China’s second-biggest steelmaker, and three other parties including Steel Asia — begins production.
    
With a planned capacity of 8 million tons per year, the ISP is expected to locate at the Phividec Industrial Estate in Misamis Oriental but as yet has no definite timeline for completion.
    
“Since the Philippines at present imports most of its downstream iron and steel products, once an industry here would be in place, the first thing they could undertake is import substitution,” Paclipan remarked.
Manpower requirements
    
Meantime, should the parallel ISP project at the former NSC plant site push through, Iligan City is confident it could supply the needed manpower domestically. During its heyday, the NSC plant in Iligan employed over 4,000 workers.
    
Engr. Orlando M. Maglinao representing Rep. Frederick W. Siao of the Lone Congressional District of Iligan City, assured in the same forum Iligan City would still be able to provide the needed workers in case the project pushes through. Mr. Maglinao is a former employee of NSC.
    
“Most of the former employees of the National Steel Corporation are still here although many of them have already retired. We have already prepared a contingency plan in case this project pushes through wherein we can still tap their expertise and experience in training the new employees.”

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