Chinese and Philippine companies have signed a memorandum of understanding to build a $4.4 billion integrated steel plant at Misamis Oriental in northern Mindanao, the Department of Trade and Industry said late Friday.
China's HBIS Group and Huili Investment Fund Management and the Philippine's SteelAsia Manufacturing Corporation and PHIVIDEC Industrial Authority signed the memorandum to develop the Philippine Iron and Steel Project in two phases.
The first phase, costing about $3 billion, will result in production capacities of 4.5 million mt/mt of hot rolled coil and 600,000 mt/year of slabs. Under phase two, steel production capacity will rise to 8 million mt/year.
The construction and ramp-up period is scheduled to span from three to five years, the DTI said.
The project will reduce the Philippines' trade deficit as total domestic and export sales of slabs and hot rolled coils from the project will amount to Philippine Pesos 144.279 billion ($2.72 billion), the country's Board of Investments said.
"This will also help us reduce the trade deficit by as much as $2.3 billion in Phase 1 and up to $4.4 billion in succeeding phases, as we will now produce critical items that we import..." DTI secretary Ramon Lopez said.
"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," Lopez said.
State-owned HBIS Group is a major steelmaker in China while Huili Fund is a private equity firm specializing in real estate, finance and industries. SteelAsia is a major rebar producer in the Philippines with a domestic production capacity of 2.3 million mt/year from six domestic mills.
