Local steel firms question capability of NSC

Local steel makers doubt the capacity of the new foreign owners of National Steel Corp. (NSC) to modernize the plant and produce globally competitive steel products due to their lack of financial and technical resources.

Filipino Galvanizers Institute (FGI) president Salvio Perez said Global Infrastructure Holdings Ltd. (GIHL) registered with the Securities and Exchange Commission its local unit, Global Steelworks International Inc. with a capital of only P11 million. "Such meager capital only showed that the Indian firm is banking on tariff protection to be able to re-operate NSC’s Iligan facilities and not on its own investments," he said.

Existing steel makers, on the other hand, have invested billions of pesos to modernize their facilities.

NSC creditor banks and GIHL are set to sign on Sept. 19 the definitive agreement on the acquisition by the latter of NSC. Perez said as the new owners, the Indian firm is required under the selection process to include in their technical offers comprehensive rehabilitation program.

"GIHL must be able to prove first that it possesses the technical and financial resources to operate, upgrade/modernize the facilities to bring the quality of its products at par with the other major steel mills in the region," he added.

The steel makers have reiterated their call on the government to recall the tariff protection the new foreign owners of NSC are bound to enjoy at the expense of the Filipino-owned companies. The perks, particularly tariff protection would jeopardize the operations of the local industry that has been contributing to the country’s foreign exchange through their exportations.

"We have repeatedly stated that the FGI is not against the rehabilitation and re-operation of the Iligan facilities on NSC," Perez said. "However, the rehabilitation of the plant must be achieved through technology and capital infusion which should not be provided by way of tariff protection that will translate into cost penalty to downstream producers."

Most downstream companies now export to the US West Coast, Hong Kong and member countries of the Association of Southeast Asian Nations.

Heavy loads of debt forced the closure of NSC five years ago. The burden also proved too much for a Malaysian group, which also failed to bring back National Steel to profitability.