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By Dennis D. Estopace and Niel V. Mugas , Reporters
Second of 3 parts
CAGAYAN DE ORO CITY: Only an hour on his first
day, Roberto Sacramento, the newly installed Bureau of Customs
District 10 collector, pushed his monobloc chair away from his
Formica-top desk and sat in his off-white sport-utility vehicle for
an hour’s ride to prove his point: Warehouse 12 is a priority.
“After my oath-taking, Commissioner [Alberto]
Lina told me to look into [the alleged smuggling activity of the new
National Steel Corp. owners],” Sacramento told The Times May 9 in
his office here. “He asked me to take measures to monitor what
comes in and what comes out. He wants things to be very open.”
Sacramento, Class 1971 of the Philippine
Military Academy, declined to talk about the report of Customs
executive Ana Marie Maglasang to Enforcement Security Services
director Nestor Gualberto. In it, Maglasang alleged that Global
Steelworks International Inc. (GSII) has not been giving the
government its due in duties and taxes in GSII’s shipment of raw
materials.
Sacramento, however, plans to set up and run the
computerization system to make operations at the GSII’s Custom
Bonded Warehouse (CBW) more open.
In a convoy of four vehicles, two of which had
Philippine National Policemen brandishing baby Armalites, Sacramento
inspected Customs District 10 office in Iligan City, inside the GSII
compound and in front of Warehouse 12.
Several coils of steel lined the CBW 12 in
GSII’s compound in Barangay Suarez. Wearing a white hardhat,
Sacramento was told by some of two dozen men representing the Bureau
of Customs and GSII that some of these coils had been the subject of
notices of abandonment by the Customs District 10 office.
In effect, the GSII’s failure to file required
documents and pay the duties and taxes on these coils would make
them the property of government.
The Bureau of Customs’ notices of abandonment,
signed by Collector of Customs II Datu Samson R. Pacasum, and each
dated April 27, followed Das’s letter on April 26 advising Pacasum
that the company would be “filing as soon as possible any pending
bills of import entries. . . .”
Maglasang inspected Warehouse 12 on April 24.
By May 13, however, Sacramento withdrew the
notices of abandonment, saying “there had been no seizure and
forfeiture proceedings against any of the importations of GSII.”
In his letter to GSII President Sushant C. Das,
a copy of which was given to The Times by GSII’s press relations
company, Sacramento said that “the GSII was able to file the
necessary entries even before we could serve the notice of
abandonment.”
The speed of Sacramento’s decision added to
local steel industry leaders’ fears of a whitewash of
Maglasang’s exposé and recommendations for an audit of Warehouse
12.
Fears of whitewash
The GSII’s influence is pointed out by
industry leaders, who asked not to be named, but fear a possible
whitewash in GSII’s alleged smuggling.
The steel company’s reopening was one of
President Gloria Arroyo’s campaign promises when she sought a
fresh six-year term in May last year. The President spent part of
her childhood in Iligan City.
Also, the GSII’s parent firm, the Ispat Group
of Companies, controls about 52 percent of the world’s total steel
production, according to worldwide estimates. The Ispat group
operates and manages 14 million tons of steelmaking capacity in the
Philippines, Libya, Nigeria, India (including Ispat Industries in
India) and Bulgaria.
Industry leaders noted that Maglasang’s report
had been sent to Gualberto. In a phone interview, Gualberto
confirmed the report’s content to The Times. He said he had
submitted the report to Lina on the first week of May.
One official said, however, the downstream steel
industry is more concerned that despite the incentives given to the
GSII, the company hasn’t reciprocated with quality products.
Almost 60 percent of what we buy from the GSII are being rejected by
other businesses, he said.
Some businesses in the downstream steel industry
are members of three associations under the Federation of Philippine
Industries.
A leader of one of these groups said the hot and
cold rolled coils being produced by the GSII are not compatible with
the local industry’s steel production.
While most galvanizers use steel products with a
line speed of 120 meters a minute, the GSII produces only 20 meters
a minute.
A top galvanizer noted, “There is no way the
GSII can turn out products that are on a par with both domestic and
international standards, since its facilities are old and need
upgrading.”
When the GSII took over the National Steel Corp.
in 2004, “it implemented a rehabilitation scheme, and not an
upgrading scheme,” he added.
However, Das maintained GSII’s inclusion in
the Ispat Group, saying, “Our company is part of one of the
biggest steel manufacturers in the world. We achieved that status by
making world-class products.”
The GSII’s plant produces hot rolled plates,
hot rolled coils, cold rolled full hard coils, cold rolled annealed
coils, and tin plate coils.
Strong influence
Allowing the GSII to be late in submitting its
documents and in paying for duties and taxes on raw materials in the
CBW, says Maglasang of the customs bureau, is just some of the
considerable leeway it got from the government.
After President Arroyo’s visit to the old
manufacturing plants here in 2004, the GSII also got Executive Order
375 raising the tariffs from 3 percent to 7 percent.
The increase in tariffs, or payment by importers
to companies bringing products here, would benefit the GSII.
Before the GSII bought the National Steel Corp.
after it shut down in 1999, local steel companies had been importing
100 percent of their raw materials to produce rivets, steel bars and
galvanized-iron sheets. A tariff would hike prices of these raw
materials and pressure local steel companies to either increase the
prices of their products or buy their materials from the GSII.
The executive order was issued even without the
GSII making a substantial investment in the Philippines, like the
rehabilitation of National Steel’s production lines, said
officials of a steel industry group who requested anonymity.
The new tariffs are supposed to take effect once
the GSII starts up, according to the Tariff Commission. GSII
President Sushant C. Das said operations would begin in June.
In the past three months, the GSII had also been
lobbying the Philippine Export-Import Credit Agency (Philexim) to
grant it a guarantee for $20 million (or more than P1 billion) in
fresh loans it intends to get from a foreign bank. The GSII said it
needs the cash to fund its modernization program.
Sources from PhilExim noted, however, that the
company needs the new loan only to pay its original loan from one of
its suppliers, the Stemcor (SEA) Pte. Ltd., through the Australia
and New Zealand Banking Group Ltd. based in Singapore. The loan,
these sources said, will mature this year.
PhilExim chair and Finance Secretary Cesar
Purisima is against granting any guarantee to the GSII.
“It should be making investments and not
loans,” he said.
The PhilExim website shows that besides metals,
India also exports eight raw materials to the Philippines, including
organic and agro chemicals. It added that India’s exports to the
Philippines amounted to $248 million in 2001 to 2002.
In his report on the state of Philippine
competitiveness, Roberto de Ocampo, president of the Asian Institute
of Management, noted that the country ranked 13th in the percentage
of its exports of goods to gross domestic product. India ranked
56th.
In relocation of production and services,
however, India ranked number 1, and the Philippines ranked 51 and
50, respectively. India also ranked 11th in strong management of
public finances; the Philippines was 56th.
An Agence France-Presse news report quoted
Indian Foreign Minister Natwar Singh as saying last year that he
expected trade between Asean and India to reach $30 billion by 2007.
Part III: Global vows to become RP’s
biggest taxpayer
How steel is made
a. Mining: Raw materials—iron-ore
lumps, sinters (a whitish chemical sediment consisting of porous
silica or calcium carbonate deposited by a mineral spring) and
pellets 1, coke (made from coking coal) and fluxes such as
limestone, dolomite (a white, reddish or greenish mineral consisting
of calcium magnesium carbonate, found in sedimentary rocks)—are
mined and transferred to plants.
b. Melting: Raw materials are charged in
a blast furnace where hot air is pumped to melt iron and changes at
1600°C. The molten metal when cooled and solidified is called pig
iron. Alternatively, it can be further refined to make steel. Slag
(fluxes with foreign matter from ore) is separated, and blended with
used coal to make cement.
c. Refining: Molten metal from the blast
furnace is taken to steel melting shop where further reduction of
impurities is done in oxygen oven or open health furnace (old
technology). The crude steel in liquid form is taken in a ladle for
further refining/ addition of Ferro alloys, etc.
d. Casting: The liquid steel is cast into
semifinished products such as billets, blooms, slabs, etc. This
process, called continuous casting, is different from old technology
(still in use in older plants) where liquid steel is first
solidified in large blocks called ingots and then rolled into semis,
involving higher energy and waste in reheating.
e. Rolling: The semis such as billets,
blooms and slabs are heated at 1200°C to make metal malleable and
then rolled into finished products. There are different rolling
mills for different products. A rolling mill for long products such
as bars, angles, structural, etc., can be part of a steel making
plant or an independent small-scale industry.
Flat product rolling mills are
capital-intensive, as they have to meet strict quality parameters.
Rolling slabs in flat product plates or strips or coils by heating
the slab follows. The sheet’s thickness can be further reduced by
cold rolling, i.e. rolling in mill at room temperature. A cold roll
can be zinc-coated in a galvanizing plant to make galvanized plates
or corrugated sheets. Wire rods can be drawn to make wires.
Part 1 | Part
3 |
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