A Memorandum of Understanding (MOU) was signed between HBIS Group Co.,Ltd., Huili Investment Fund Management Co.,Ltd., Steel Asia Manufacturing Corporation, and PHIVIDEC Industrial Authority that will jointly implement the Philippine Iron and Steel Project in Misamis Oriental amounting to USD 4.4 billion-worth of investments, the biggest industrial investment from China to date. The project comprises of two phases which will generate over 20,000 additional job opportunities.
During the signing on 13 December 2018, Department of Trade and Industry (DTI) Secretary Ramon Lopez shared that the project will allow the country to substantially produce basic iron and steel products that will also further supply downstream steel products, like metal sheets and bars, including nails, staple wires, and paperclips as well as construction-grade products steel products such as wire rod and wire mesh. It will also support the Philippine’s bid to be a major producer of high-quality and safe steel products by 2030.
“This project is very important to our industrial development and will allow us pursue President Duterte’s vision of having a globally competitive integrated iron and steel industry, to support the growing economy, to alleviate poverty, and to create jobs for every Filipino,” said Sec. Lopez.
“This milestone is also a result of stronger relationship between Philippines and China under the leaderships of President Rodrigo Duterte and President Xi Jinping,” Sec. Lopez added.
The project will occupy a 305-hectare land inside the PHIVIDEC Industrial estate identified to be the most strategically-located industrial zone in our country for heavy industries right inside Mindanao. The facilities in the plant will include those related to port operation, sintering, coking, pelletizing, iron-making, steel-making, steel rolling and further processing. The construction and ramp-up period is scheduled to span from three to five years.
Phase I will cover production of 4.5 million tons of hot rolled coil (HRC) and 600,000 tons of slabs with USD 3 billion worth of investments. Meanwhile, the project will increase its steel manufacturing capacity to 8 million metric tons under Phase II.
The iron and steel production base is also projected to provide indirect job opportunities up to 65,000 to related businesses.
“Boosting the manufacturing sector creates jobs and increases the production capacity to support the growing domestic demand and export requirements. This will also help us reduce trade deficit by as much as USD 2.3 billion in Phase 1 and up to USD 4.4 billion in succeeding phases, as we will now produce critical items that we import; and our range of steel-based export products will expand,” said Sec. Lopez.
According to the Board of Investments (BOI), the Philippine Iron and Steel Project will reduce trade deficit as total domestic and export sales of slabs and hot rolled coils (HRCs) from the project would amount to Php 144.279 billion.
“This project is very important because it truly represents industrial empowerment. With this integrated steelmaking facility, the country will be able to capture, through this and succeeding phases of the project, large part of the value for the manufacture and assembly of appliances, automotive assembly, construction materials, shipbuilding, heavy equipment manufacturing, among others,” said DTI Undersecretary and BOI Managing Head Ceferino Rodolfo.
Iron and steel is the country’s 5th import by commodity group valued at USD 4.91 billion from January to October 2018, a growth of 39.4% from 2017.
HBIS Group Co.,Ltd., a wholly-state-owned company in Shijiazhuang City, Hebei Province, is the second largest steelmaker in China and thirst largest in the world. It is a major player in producing appliance grade and automotive grade steel products. Meanwhile Huili Fund, a private equity firm based in Beijing, China, specializes in investing in real estate, finance and industries with a competitive edge. It has expressed its intention to partner with PH and private sector entities through a letter of intent to BOI signed in 2017.
Steel Asia has been a top rebar producer in PH with six production units located in Luzon, Visayas, and Mindanao. It is upgrading and pursuing expansion program to boost production efficiency and capacity.
The MOU was signed by HBIS Chairman Yu Yong, Huili Investment Fund Chairman Meng Xiaosu, Steel Asia Chairman and CEO Bejamin Yao, Department of National Defense Secretary Delfin Lorenzana, and BOI Managing Head Ceferino Rodolfo.