In order to boost the local steel production, as well as help the local construction industry in Cebu, the Development Bank of the Philippines signed a P5.7-billion long-term loan agreement for the construction of the largest facility in Compostela, Cebu. This is in partnership with the country’s biggest steel manufacturer, the Compostela Steel Inc. (CSI).
According to DBP President and Chief Executive Officer Emmanuel G. Herbosa, they are working with CSI, a subsidiary of Steel Asia Manufacturing Corporation, to further improve the country’s infrastructure landscape. He underscored that it is a developmental priority to finance projects that would enable the local construction industry to be self-reliant in steel – given that DBP is the premier infrastructure bank of the country.
The Development Bank of the Philippines is the eight largest bank in the country in terms of assets. It known in providing credit support to the four strategic sectors of the economy – infrastructure and logistics; micro, small and medium enterprises; environment; social services and community development.
The Construction of the Compostela Works Rolling Mill
Compostela Steel Inc. will utilize the P5.7-billion loan provided by DBP in partially financing the Compostela Works Rolling Mill. Meanwhile, its parent company, SteelAsia, will thereby shoulder the P8.3-billion balance of the total capital requirement.
This facility in Compostela will be the seventh mill of SteelAsia in the country, including the facilities in Carcar, Batangas, Davao, Cagayan de Oro, and Bulacan. Its construction will start this year – which will help generate up to 3,000 direct and indirect jobs. With the current problem on scarcity of locally-manufactured steel in the Visayas, this facility is expected to meet this growing demand for production.
The CSI Mill will feature Italian engineering and technology – which is known to be more cost-efficient in comparison to foreign mills that export steel rebars in the country.
For its second phase, the CSI project will focus on the expansion of its capability to produce wire-rod – a steel product that can support downstream small-scale manufacturing businesses, that can act as a viable import-substitute. At present, the country does not have the wire-rod manufacturing capability. In fact, we highly rely from the imports of our neighboring countries like Malaysia, Indonesia, Vietnam and China. In a year, the Philippines spends an estimated amount of US$350-million worth for wire-rods alone.
As stated by DBP Executive Vice President for Development Lending Jose Gabino D. Dimayuga, this long-term financing deal will truly enhance the competitiveness of strategic local industries, such as steel manufacturing in the country. Herbosa added that we can boost the local production of construction supply materials, the country can lessen its dependence on imports while stimulating the economy amidst the pandemic.