Global Ferronickel braces for infra boom with steel manufacturing debut

Listed Global Ferronickel Holdings Inc. (FNI) is investing at least $50 million to go into the steel manufacturing business by 2021 as the current infrastructure buildup under the Duterte administration is expected to keep chugging.

In a media briefing on Wednesday, FNI president and chief executive Dante Bravo unveiled the company’s plan to put up a $20-million steel plant in Luzon alongside partner, Hong Kong-based Huarong Asia Limited. It is expected to shell out $25-30 million more to jump-start operations by 2021.

Bravo said the decision to expand into steel manufacturing was due to the growing domestic demand for the commodity, especially with the government’s plan to accelerate spending on infrastructure this year and the succeeding years.

FNI, being the second largest nickel producer in the country, has a unique advantage over its competitors given the importance of ore in increasing the quality of steel.

The plant is expected to produce 600,000 metric tons (MT) of carbon steel rebars every year, which would allow it to gain a 6-percent market share in an industry that utilizes 10 million MT of steel annually.

As production costs in the Philippines remained high, Bravo said they would be importing their raw materials from China. The second biggest economy boasts of lower power and freight costs, which would allow FNI to operate “in the economies of scale that we envision.”

“No iron mine [in the Philippines] can provide us volume that would enable us to compete. Sourcing locally at this point is not economically viable given high power and freight costs,” Bravo said.

Bravo said they were scouting areas in Luzon situated in industrial zones that were near a good port facility and a power plant.

While primarily looking to cater to the local market,  the company was open to exporting if opportunities arise, Bravo said.