The Development Bank of the Philippines (DBP) signed a P5.7-billion long-term loan agreement with a subsidiary of the country's biggest steel manufacturer, Compostela Steel Inc. (CSI), for the construction of its largest facility in Compostela, Cebu.
CSI, a subsidiary of Steel Asia Manufacturing Corporation, is embarking on a project to boost local steel production and help the local construction industry, according to DBP President and Chief Executive Officer Emmanuel G. Herbosa.
Hence, DBP is giving credit support to the Compostela facility "to improve the country’s infrastructure landscape”, he reasoned.
“As the premier infrastructure bank of the country, financing projects that enable the local construction industry to be self-reliant in steel is a developmental priority," Herbosa underscored.
DBP is the eighth largest bank in the country in terms of assets and provides credit support to four strategic sectors of the economy – infrastructure and logistics; micro, small and medium enterprises; environment; social services and community development.
CSI will use the DBP loan proceeds to partially finance its Compostela Works Rolling Mill.
Its parent company, Steel Asia, will invest the balance of the P8.3-billion total capital required.
The Compostela facility is the seventh mill of SteelAsia in the country. Its other facilities are located in Batangas, Carcar, Davao, Cagayan de Oro and Bulacan.
The CSI mill started construction in 2019 and will generate up to 3,000 direct as well as indirect jobs.
It is expected to meet the growing demands for steel products in the Visayas, where the supply of locally-manufactured steel is currently scarce.
Significantly, the CSI mill features Italian engineering and technology, which is more cost-efficient, compared to foreign mills that export steel rebars to the country.
“If 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," according to Herbosa.
Furthermore, the second phase of the CSI project will expand the facility’s capability to produce wire-rod, a steel product that can support downstream small-scale manufacturing businesses and act as a viable import-substitute, added DBP Executive Vice President for Development Lending Jose Gabino D. Dimayuga.
At present, the Philippines has zero wire-rod manufacturing capability and relies solely on imports from Malaysia, Indonesia, Vietnam and China, which totals more than US$350-million worth of wire-rods annually.
“Through this long-term financing deal, DBP will do its share in enhancing the competitiveness of strategic local industries, such as steel manufacturing,” Dimayuga concluded.