(Story updated to correct amount of investment from dollars to pesos)
THE country’s largest steel manufacturer has invested P25 billion on two wire-rod mills that will produce 1 million tons a year and are seen to resurrect the country’s manufacturing industry.
At present, the Philippines has no capacity to manufacture wire rods. SteelAsia Manufacturing Corp., however, looks to end that with the establishment of wire-rod mills in the Visayas and in Central Luzon.
SteelAsia Chairman and CEO Benjamin O. Yao said the country imports all 800,000 tons of wire-rod annual requirements. Once the wire-rod mills become operational, their outputs can substitute imports amounting to $600 million a year.
“At present, the Philippines has zero capacity for wire rods. That means, we are importing all our wire-rod requirements, which have reached 800,000 tons a year and climbing,” Yao said.
“When operational, this import substitution will save the country around $600 million a year in foreign currency,” he added. Micro, small and medium enterprises (MSMEs) are expected to benefit from SteelAsia’s investment on wire-rod production.
Wire rods are the main input for several products, such as machine parts, springs, cables, welding wires and rods, mesh, nuts and bolts, screws and other fasteners, tools and tire cord, among others.
MSMEs producing these items can gain from a local supply of wire rod, which, in turn, could link their supply to high-value manufacturing, including the automotive and machinery industries. This steel-based model for industrialization, according to SteelAsia, was drawn from the United States, Europe, Japan, South Korea, Taiwan and China.
Yao said imported wire rods are too costly for MSMEs. This is one reason small enterprises that need wire rods as inputs for their products have difficulty competing with their imported counterparts of what they produce.
“Hence, the Philippines has been importing its nuts and bolts, wires, nails, welding rods, springs and even paper clips, staple wire and many other wire-rod-based products, while all these can actually be locally produced if only the Philippines had wire-rod manufacturing,” Yao said.
The two mills are estimated to manufacture 500,000 tons a year each. The one in Visayas will service the requirements in the region, as well as Mindanao, while the one in Central Luzon will provide for the requirements in Metro Manila and the rest of Luzon.
SteelAsia has 11 operating plants across the country with capabilities on upstream, midstream and downstream steel production.
It is the country’s largest steel manufacturer with over 2.6 million tons of annual output of several steel products. The firm has earmarked P100 billion in investments for the next five years to quadruple its capacity and help the Philippines be 70-percent steel self-sufficient, from the current 40 percent.