State-owned Development Bank of the Philippines (DBP) has signed a P5.7-billion long-term loan agreement with Compostela Steel Inc. (CSI), for the construction of its biggest steel-making facility located in Compostela, Cebu, a top official said.
DBP President and Chief Executive Officer Emmanuel G. Herbosa said the bank’s credit support to CSI, a subsidiary of Steel Asia Manufacturing Corporation, the country’s biggest steel manufacturer, would be a boon to the local construction industry and will help boost local steel production.
“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, as it further improves the country’s infrastructure landscape,” Herbosa said.
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.
Under the agreement, the loan proceeds will be used to partially finance the Compostela Works Rolling Mill, with parent company, Steel Asia, investing the balance of the required total capital amounting to P8.3-billion. The mill is the seventh of SteelAsia in the country, in addition to its other facilities in Batangas, Carcar, Davao, Cagayan de Oro, and Bulacan.
Herbosa said the mill, which started construction in 2019, is expected to meet the growing demands of the Visayas region, where there is limited supply of locally-manufactured products, while generating up to 3,000 direct and indirect jobs.
He said the mill boasts of Italian engineering and technology and 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 local economy amidst this national public health emergency,” Herbosa said.
DBP Executive Vice President for Development Lending Jose Gabino D. Dimayuga said the second phase of the project would 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.
He said that, at present, the Philippines has zero wire-rod manufacturing capability and relies solely on imports from Malaysia, Indonesia, Vietnam and China, which totals to more than US$350-million worth of wire-rods annually.
“We hope that through this long-term financing deal, DBP will do its share in enhancing the competitiveness of strategic local industries such as steel manufacturing,” Dimayuga said.