Steel Asia sees ROI in 10 years for Davao plant

STEEL Asia Manufacturing Corp. (SAMC) is expecting a 10-year return of investment (ROI) in its P3-billion Davao Works Rolling Mill, which was inaugurated at Purok 17 in Bunawan, Davao City on Thursday.

SAMC vice president for corporate development Rafael Hidalgo told reporters in an interview after the inauguration ceremony on Thursday that steel mills usually take 10 years to get its ROI.

"The bigger the steel mill, the shorter the ROI is. But for the long term, it would be around 10 years," Hidalgo said.

He also expressed optimism on the growth opportunities in Mindanao, claiming the Department of Public Works and Highways (DPWH) has a bigger budget in Mindanao and this will open up opportunities for the company as they could provide the government agency the construction material it needs.

"For infrastructure, DPWH has a bigger budget for Mindanao compared to the National Capital Region (NCR). For 2015, the budget grew by 60 percent compared to 2014. So there will be a lot of infrastructure which will be built in Mindanao. And when you build infrastructure, everything follows. And because of these infrastructures, Mindanao is a huge market prospect," Hidalgo said.

He added that they may need another mill to address the growing demand for construction products particularly steel in Mindanao.

SAMC chairman Benjamin Yao, meanwhile, told reporters in the same interview that he is positive that they could provide ample supply for their consumers, saying: "We are enjoying an abundant supply of raw materials whether it is from Russia, China or Europe. But what we are benefiting from is the low-cost raw materials that we get from China."

He also said they are expecting more consumers in Mindanao, claiming they offer the best quality rebars at significantly low costs. Yao attributes the cost cut from the savings that they get from shipping costs.

"Early this year, they buy from us, it is shipped from Manila and they pay P35,000 more for the shipping. Today, it is free. The solution basically is totally eliminating freight. So the raw materials from China go straight to Davao and this also means more taxes for Davao," Yao said.


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