Friday, 28 May 2010

RP to assess feasibility of $1.6-B iron, steel facility

Written by Jonathan L. Mayuga
Business Mirror

DUE to the unstable and increasing prices of iron and steel in the world market, the Philippines will conduct an assessment on the viability of establishing an integrated iron-and-steel facility in the Philippines.

Environment Secretary Horacio Ramos said President Arroyo has directed the Department of Environment and Natural Resources (DENR) to conduct the assessment on the impact of the iron-and steel-price increase to the local economy, particularly in terms of possible higher prices of vehicles and consumer products.

According to Ramos, the country is endowed with iron resources that can supply the iron ores and concentrates for the planned integrated iron-and-steel facility. 

“With that, the possibility of making the iron-and-steel industry as a major backbone of the country’s industrialization program is extremely favorable,” he said.

At the same time, President Arroyo has approved several recommendations made by the DENR chief, including the creation or revival of a work and study group for the “Integration of the Philippine Iron/Steel Industry Utilizing Indigenous Iron Ores.”

One of the DENR chief’s recommendations is to study the option of imposing government control on the exports of iron ore within the next five years, taking into consideration the need to conserve the resource for the possible establishment of iron ore/steel processing plants, as well as the rights and privileges of companies exploring or producing iron. 

This should also include a study on possibly imposing controls on the price of substitute materials, which price might increase, he said.

According to Ramos, the increase in the price of iron and steel in the world market requires the government to conduct an assessment of the iron-ore potential of the country.

The iron-ore deposits, particularly in Sta. Ines, Antipolo, Rizal; Abra de Ilog in Occidental Mindoro; Misalip in Zamboanga del Norte, should now be revisited, he said.

According to Ramos, most of the known Philippine iron ore deposits, terrestrial or offshore, are magnetite deposits that are suitable for a direct-reduction furnace.

The DENR chief also recommended that a study be made on the viability of setting up an iron processing or steel plant, which will require a minimum feed requirement of 2.4 million tons per year.  The estimated capital expenditure for such a plant is pegged at $1.6 billion.

Ramos also recommended a review or assessment of the package of incentives that can be given to mining companies producing iron ore and to companies willing to put up iron ore/steel plants in the Philippines

The DENR chief has directed the Mines and Geosciences Bureau (MGB) to come up with an updated resource inventory for iron and other iron-bearing deposits.

Edwin Domingo, the MGB officer in charge, said it will take a year to conduct such iron-and-steel inventory.

The proposed iron-and-steel facility is a brainchild of the Board of Investments under the Department of Trade and Industry, the Metals Industry and Research Development Center of the Department of Science and Technology, and the MGB. 

Under the assessment of the viability of establishing an integrated iron-and-steel facility in the country, the MGB has lined up a number of activities, namely, market studies, resource inventory of iron and other ferro-alloy deposits, characterization and assessment of Philippine iron ores, laboratory analysis and pilot-testing for upgrading of magnetite iron ores for the production of sponge iron or pig iron as feed to the iron-and-steel industries.

In the past two weeks, Ramos noted that the price of iron ore in the world market has shot up to $120 to $130 per metric ton from the $70 per metric ton (MT) price in 2009.

The increase was attributed to the strong demand for mineral in the world market, especially in Asian countries and some European countries like Russia, for the manufacture of cars and other machineries in these countries, Ramos said.

According to the MGB, as of 2009, the Philippines has a total of 493.5 billion MT of iron resource with an average grade of 44.2-percent iron.

The record further showed that the country’s iron resource is distributed in different locations all over the country, like Bulacan, Ilocos Norte, Cagayan, Sorsogon, Paracale in Camarines Norte, the Mindoro provinces, Leyte, Negros Occidental, Zamboanga, the Agusan provinces, the Davao provinces and Cebu.

As of 2008, the total export of iron ores and concentrates, including roasted iron pyrites, to the People’s Republic of China, Taiwan, Hong Kong and Japan reached 76,500 gross tons, amounting to P84.4 million freight-on-board value, the National Statistics Office–Foreign Trade Statistics revealed.

Meanwhile, the country’s total import of the same mineral commodity during the same period from the Netherlands, Brazil, Switzerland, Papua New Guinea, and the People’s Republic of China, and Japan reached 237,700 gross tons, amounting to P220.6 million free-on-board value.

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