By Bernie Cahiles-Magkilat
The Board of Investments (BOI) has denied the application of Chinese firm Sanjia-Steel Corporation to invest P800 million for the production of reinforcing steel bars (rebars) using coreless electric furnace smelting technology because it will employ obsolete and pollution-causing technologies.
In its July 18, 2019 meeting, the BOI Board “resolved to deny Philippine Sanjia-Steel Corporation’s application, taking into consideration the Department of Environment and Natural Resources’ (DENR) policy against induction furnaces with defective or substandard air pollution control technology.”
BOI grants tax and fiscal incentives to projects, mostly catering to the domestic market. These incentives include a maximum of 8 years in income tax holiday, duty-free importation of capital equipment, tax deduction on expenses for training, among others.
The BOI already informed the Philippine Iron and Steel Institute (PISI) on August 20, 2019 of its decision to deny the project, which proposed to locate inside the Phividec Industrial Authority in Tagoloan, Misamis Oriental.
In its letter to PISI President Roberto M. Cola, the BOI said they considered the points raised by PISI during the project application’s deliberation.
These concerns centered on the development in the local steel industry where obsolete induction furnace facilities are being moved from China to the Philippines after the Chinese government banned in January 2017 such facilities from producing construction grade steel.
Induction furnace facilities produce sub-standard steel and are one of the main sources of pollution in their host communities. Harmful elements of phosphorus and sulfur from liquid steel are present in varying amounts in the scrap iron and steel raw material, which poses a danger to the environment due to the “hit or miss” operation of every heat or batch of steel produced.
As a result, the ASEAN Iron and Steel Council had issued a statement of concern warning governments over the moving of obsolete induction furnace facilities from China to ASEAN.
Meantime, documents also showed that the Phividec Industrial Authority (PIA) already approved on October 9, 2018 the Chinese firm’s P800-million project to locate in this government-run industrial estate. Both parties also signed a memorandum of understanding the following month, November 2018.
Sanjia would have wanted a total of 47 hectares for the P800-million manufacturing facility, but Phividec said it has only 22.6 hectares left.
The steel plant would also require 120 megawatts to produce 3,200 cubic meters of steel a month. The project was expected to employ 150 people initially and 300 three years after its operation, which is estimated to commence after a 4-year construction period.
Phividec is expected to earn P6.8 million in annual lease of the property over a 25-year lease contract renewable for another 25 years.