Davao City—A modern steel mill in this city churned out 400,000 metric tons of reinforcing steel bars last year, enough to fortify the foundation of an equivalent of 40 new high-rise buildings in Mindanao, which is experiencing a surge in construction activities.
A state-of-the-art rolling mill built by local company on a 14-hectare property in Barangay Bunawan at a cost of P3 billion supplies the requirement of the city and the whole Mindanao for rebars—an important component for the construction industry. Rebar is used for concrete reinforcement to support the weight and height of buildings.
“It is a modern plant using the latest technology from Italy. It is fully automated,” says Rhea Tanzo, an engineer and assistant manager for quality assurance at New Carcar Manufacturing Inc., the Davao-based unit of SteelAsia that operates Davao Works.
Tanzo is one of the 30 women, out of the 200 employees of SteelAsia in Davao Works. “Gender is not an issue here. As long as we are capable, we can work here,” says Tanzo, who is in charge of ensuring the quality of rebars produced by the plant.
Tanzo says the Davao steel mill also generated jobs for Davao residents. “More than 60 percent of our employees come from the community alone, or from surrounding barangays,” she says.
The Davao facility is the latest and the most modern of the six mills of Steel Asia in the country, with a combined capacity of 2.1 million tons a year. The company imports around 130,000 tons of billet a month from China, which the mills reproduce into reinforcing bars used in construction and infrastructure projects.
Steel Asia is a dominant player in the steel industry, accounting for 62 percent of high tensile rebar market in the country. The company posted a net income after tax of P1.5 billion, out of P27-billion revenue in 2015. This year, it expects the numbers to increase to P1.6-billion profit and P29-billion revenue.
Of SteelAsia’s existing six mills, four facilities have opened over the past four years, adding 1.5 million tons a year to meet the robust requirements of the construction industry. The company has yet to open its biggest facility in Plaridel, Bulacan.
SteelAsia chief executive Benjamin Yao believes that by dispersing the location of the mills, the company eliminates expensive shipping costs, bringing down the price of rebars and boosting construction activities.
Romeo Soliven, assistant vice president for manufacturing of SteelAsia and the plant manager of the Davao Works, says construction companies with projects in Mindanao used to source the rebars from Bulacan, Batangas and Cebu. “With this Davao facility, supply of rebars became abundant. The construction industry is assured of high-quality supply. They are able to save at least P1,000 per metric ton in shipping cost,” Soliven says.
The Davao mill, which has an annual capacity of 500,000 tons, started operations in December 2014. Soliven says SteelAsia invested around P2 billion to bring in modern machines, including reheating furnace with Italian brand Forni Industriali Bendotti and rolling mill and high-speed block mill with Revas brand. The automation technology is provided by Nidec, another Italian company.
The factory and warehouse alone covers 3.2 hectares, according to Soliven. “This is the most modern plant of Steel Asia. It produces 1,500 to 1,800 tons a day or 40,000 to 45,000 tons a month,” Soliven says. The fully automated plant, which has a power requirement of 7 megawatts, transforms large raw material called billet, with an average weight of 2,100 kilograms, into high-quality rebars.
The Davao mill is the first in the country to process 150 mm by 150 mm billets—a world standard today. The machines are considered power efficient with low noise. The mill features a twin tungsten carbide monoblock that can produce PNS 211 7 mm and 8 mm bars. It is also the first mill to have rotating drum technology, according to SteelAsia.
About 100 workers are involved in operation, mainly to man the computer system, monitor the machines and organize the finished products, which are in the forms of 7 millimeter to 36 mm rebars.
“We operate seven days a week. Our production is based on orders,” Soliven says. “The plant consumes 135,000 to 150,000 kilowatt-hours of electricity. We are one of the largest power users in Mindanao.”
Soliven says the plant currently operates at a capacity utilization rate of 90 percent amid strong market demand. “Our market includes the largest construction companies and developers such as DMCI and Ayala Land,” he says.
Tanzo says the rebars produced by the Davao mill exceed the requirements of Philippine National Standards. “We are very strict in monitoring, and we follow the strength ratio. Our internal standards are more than the Philippine standards, so that we can assure customers about the quality of our products. Our products are better than imported products,” she says.
Soliven says product testing is done every 30 tons of production, compared to 80 tons in other companies.
Tanzo says apart from direct employment, the Davao mill created livelihood opportunities in Davao. “Restaurants and apartments were built around the area. Aside from that, we have our CSR [corporate social responsibility] projects. We have our medical missions conducted. We also support the Department of Education,” she says.
Soliven says the modern equipment allows Davao Works to reduce solid waste and emission. “We have almost zero discharge. Our waste material called ‘scale’ is being bought by Chinese companies. Representatives from the DENR [Department of Environment and Natural Resources] regularly test our air emission. And we use rainwater for cooling,” says Soliven.
The plant consumes 150,000 cubic meters of water every year. Wastewater is recycled and treated and re-used in operations through a rainwater catchment basin, with a capacity of 50,000 cubic meters. It also has a materials recovery facility that handles the scales, or the byproduct of the milling process.
SteelAsia banks on the rapid expansion of Mindanao, which received renewed attention when former Davao City Mayor Rodrigo Duterte won the presidency in May this year. Davao Region is one of the fastest growing areas in the country, expanding 9.4 percent in 2014 and 7.9 percent in 2015.
“There are a lot of buildings being constructed not only in Davao but also in other parts of Mindanao. There are also roads and bridges being built in almost all municipalities. I know because I go home to Agusan twice a month,” says Soliven.
Lawyer Arnolfo Ricardo Cabling, a former barangay chairman and councilor of Davao City, confirms the rapid growth of the real estate sector in the city.
“I used to be the overall chairman of the Davao City council committee on housing. Condominium construction started six years ago. First it was DMCI, followed by Camella. Now, you can see condominiums being constructed everywhere. Condominiums are selling like hotcakes. People want to do business in Davao City,” Cabling says in an interview at Park Inn Hotel by Radisson located beside SM Lanang Premier.
Cabling says the city council approved the entry of SteelAsia to support economic growth. “In economic boom, steel is a vital component. To build high-rise buildings, we must have our own supply. We used to source steel from Cebu, Manila and even China and we were not certain of quality and standards. When SteelAsia applied, they assured us that they would be the only manufacturing plant in the Philippines that would pass the PSI standards. We checked and we verified everything,” says Cabling.
Cabling says with the growth of the construction industry, prices of real estate also surged. “Before the economic boom, we could buy land for P250 per square meter. Now, we can hardly find one at P1,000 per square. It’s P2,500 or P3,000 per square meter,” he says.
The construction industry is also optimistic about business prospects in Mindanao. “Mindanao economy is now gaining momentum driven by bountiful opportunities,” Anacleto Calamba Jr., president of Philippine Institute of Civil Engineers-Davao City Chapter, says in a message during the PhilConstruct trade show organized by Philippine Constructors Association at SMX Convention Center in Lanang.
“Today, most of the national focus is in Mindanao, particularly in Davao,” James Jao, national president of Philippine Institute of Interior Designers, says in the same event.
SteelAsia expects the robust demand for rebars to continue in the coming years, with the Philippine economy seen growing 6 percent to 7 percent annually. Local steel consumption is projected to reach 20 million metric tons by 2030, from 4.1 million MT in 2010.
Edwin Lu, manager for offsite fabrication at SteelAsia, says the company will continue to play an important role in supporting economic growth. He says the rise of Fort Bonifacio as the newest commercial business district was supported by SteelAsia.
“SteelAsia supplies 80 percent to 90 percent of rebars in BGC [Bonifacio Global City],” he says.
“Rebars form the backbone of the whole building structure. It is estimated that for every square meter of floor area, there are 50 kilos of rebars. So a 100-square-meter house consists of five tons of steel,” says Lu.
Ma. Teresa Pacis, assistant vice president for corporate communication of Steel Asia, says the company is optimistic about the future. “Infra projects and residential projects of developers are on the rise. We are very optimistic. We build for the future. We are raising the bar,” Pacis says.