Japanese steel firm expanding on Mindanao

When Kawasaki Steel Corporation found the site of its Tokyo Bay steel plant so jammed that expansion was nearly impossible, Philippine investment promotion authorities were delighted. As a result, they snagged one of the largest foreign investments in the Philippines -- a $210 million sintering plant on the northern shore of Mindanao Island.

That alone has provided 600 jobs in a high-unemployment area and a massive boost to the local economy.

Moreover, the plant could become an essential supplier of blast furnace material for an integrated basic steel plant the Philippine government would like to launch.

"We've been talking about this since the early 1960s," noted Minister of Industry Roberto V. Ongpin in an interview.

Mr. Ongpin, a Harvard Business School graduate and former president of a leading Philippine accounting and management consulting firm, believes the 1.5 million-ton steel plant is close to reality. Some detailed feasibility studies have been completed. Mr. Ongpin and his colleagues have been discussing with prospective foreign partners in Austria and Japan the technical and engineering aspects, the supply of equipment, and joint-venture arrangements.

A key difficulty is the cost -- more than $1.4 billion. Mr. Ongpin expects most to be financed by foreign equipment suppliers.

"Everybody is trying to sell equipment," he says. "Every country, except perhaps the United States, has an aggressive export promotion program. You [the United States] are not in the ball game."

The project, he adds, could be cut up into segments. These will likely be "turnkey" deals -- the foreign companies would build the plants, train workers, and turn them over ready for commercial operation.

The plant's steel output is expected to replace to some extent imported steel. Those imports amount today to about 2 million tons.

Mr. Ongpin says the government is not going to build a facility that will export into a world market already glutted with steel.

"We are not talking about becoming another South Korea. We are looking at a modest facility . . . but of economic size."

One goal of the government, he added, is to use as much Philippine raw materials as possible. The sintering plant here gets 50 percent of its ore from Australia, 40 percent from Brazil, and 10 percent from Canada.The government would prefer to have this plant get its ore from a domestic source, possibly the tailings from a nickel mine on Nonoc Island, offshore of northeast Mindanao. These contain about 50 percent iron, but would have to be upgraded to be fed into this sintering plant.

In any case, Mr. Ongpin says that a deal for the steel plant is months, not years, away.

Last year this sintering palnt produced 4 million tons of sinter for its Japanese parent company. This is well under its capacity of 5 million tons, reflecting the poor demand for Japanese steel.

Sintering consists essentially of mixing fine iron ore with coke breeze and a limestone flux. This mixture is then burned under controlled conditions to produce hard but highly permeable lumps. These make an ideal blast furnace feed.

The mixture is spread over a continuous train of pallets of the sintering machine in a uniform bed thickness. This bed of material is ignited with oil burners. Huge blowers under the entire bed, 90 meters long and 5 meters wide (about 300 by 17 feet), suck air downward, causing the mixture to burn in that direction. The temperate runs about 1,000 C.

The sinter cools fast enough on top that about halfway down the line an individual can walk on its rocklike surface. Underneath, it is red hot.

At the end of the endless chain, the sinter breaks off in huge chunks, falling into a chute. It is then crushed into small pieces.

But the sintering facilities themselves, this project includes a port capable of accommodating massive 270,000-deadweight-ton bulk carriers. The 351 -meter-long (1,160 feet) main berth is one of the world's largest. The depth along the side is 23 meters (76 feet).

There is also an 18-hectare (about 45 acres) ore yard capable of storing 1.5 million tons of sinter, ore, limestone, and coke breeze. Two large stacker-reclaimer systems help load or unload the ships. One can reclaim from the stacks up to 6,000 tons an hour.

Hiroshi Yuba, resident manager of the plant, is very proud of the plant's pollution control system. "These sintering plants are notorious for pollution," he noted. People in the area were afraid the sky would be turned black with smoke.

Using dust collectors and electrostatic precipitators, the plant has met such high standards that it won an award in 1979 for low air pollution.