China’s Panhua Group to start works on $3.5 billion steel plant soon

MANILA, Philippines — Chinese firm Panhua Group Co. Ltd. plans to start works on the $3.5 billion first phase of its integrated steel plant in Misamis Oriental before the end of the year following the signing of a memorandum of agreement (MOA) with the Philippine Economic Zone Authority (PEZA) yesterday.

Apart from Panhua’s MOA with PEZA, eight other agreements between Chinese and Philippine firms were signed yesterday.

Panhua Group chairman Xinghua Li told reporters on the sidelines of the Philippines – China (Chongqing) Trade and Investment Forum, the company intends to start construction of the first phase of the steel integrated plant as soon as it secures land in the PHIVIDEC Industrial Estate.

“We would like to start as soon as possible, probably by the end of this year,” he said.

Panhua Group needs 300 hectares for the first phase of the steel plant, which should be operational after three years from start of construction.

The first phase of the project would employ between 20,000 to 30,000 workers, but total employment could go up to 50,000 when the three-phase project is completed.

Li said the plant would have the capacity to produce 10 million tons of  products like steel slabs and galvanized steel annually, to be sold in the domestic market and exported to the European Union, US and Russia.

While the plant’s output would serve both local and overseas markets, he said the company could provide more for the domestic market to meet requirements.

“As long as market needs, we can put local market into priority to supply more,” he said citing the company would be providing for the Philippine government’s Build Build Build program for infrastructure development.

PEZA director general Charito Plaza said the MOA with the Panhua Group is intended to facilitate the application for registration by the firm to set up operations.

While the requirement for PEZA-registered exporters is to ship 70 percent of their output to overseas markets, she said Panhua Group wants to be allowed to sell more to the local market and be given a higher domestic allowance of 60 to 70 percent.

She said a higher domestic allowance is allowed as long as there is an endorsement from the President and there is domestic need for the product.

Aside from building an integrated steel plant, Li said the Panhua Group is also planning to put up a China Chongqing Industrial Park in the country.

The group, which requires 300 hectares for the industrial park, is still looking for a possible site.

Apart from the MOA between the Panhua Group and PEZA, other agreements signed were trading contracts  between PT Sokonindo Automobile and QSJ Motor Philippines;  between Chongqing Loncin Import and Export Co. Ltd. and Yingang Motorcycle (Philippines) Ltd. Inc.;  between Qingling Motors Co. Ltd. and Kingling Motors Philippines Inc.;  between Chongqing Lifan Industry (Group) Import and Export Co. Ltd. and Mitsukoshi Motors Phils. Inc.; as well as strategic cooperation agreements between Chongqing Hongjiu Fruit Co. Ltd. and Davao Eng Seng Food Products Co.; between China Council for the Promotion of International Trade Chongqing Sub-Council and Federation of Filipino Chinese Chambers of Commerce and Industry;  between Develop Century International Logistics Co. Ltd. and Sincerity International Cargo Service Corp.; and a memorandum of understanding between Hyundai Motor Group and Beijing Hyundai Auto.