NSC reopening seen to cause power shortage in Mindanao

The reopening of the National Steel Corp. (NSC) in Iligan City is expected to cause a power shortage in the Mindanao area, affecting other businesses and residents in the surrounding provinces.

According to the National Economic and Development Authority (NEDA) in Northern Mindanao, NSC would require at least megawatts (MW) of power that would not be met by the existing power source, mostly from Ma. Cristina Falls Hydroelectric power facility.

Local officials and business leaders are wary that the steel plant would disrupt power supply because there was no facility to fill up its power demand.

According to NEDA regional director Casimira V. Balandra, there were plans to augment the power grid with the Mindanao Coal-Fired Thermal Power Plant Project but this would not be on line until 2006.

When this power plant becomes commercially operational, she said it would supply at least 20 MW of NSC’s requirement. Until then, however, the steel plant would have to get power from the existing power grid already limited by current demand.

Local businessmen were already complaining about the region’s periodic power interruptions which they say have grown worse over the last few months.

According to plastics manufacturer Teodorico Escober, president of the First Industrial Plastic Venture in Mindanao, power supply was already suffering from diminished capacity and increasing demand, leading to power interruptions of as often as three times weekly.

Escober said the interruptions increase the cost of equipment and overall maintenance costs, ultimately eating into their profit margins and competitiveness.

If NSC opens before the power plant now under construction, officials and businessmen said the steel plant would cause more problems than it did when it was closed down.

Meanwhile, Global Infrastructure Holdings Ltd. (GIHL) has indicated to the government its desire to look for iron ore deposits as part of its plan to fully integrate its steel operations in the country.

Industry sources said wants to go into iron ore exploration in Laguna.

Once a viable deposit is found, GIHL hopes to be able to enter into a Mineral Production Sharing Agreement (MPSA) with the government.

GIHL’s plans to fully integrate its steel operations in the country was indicated by Pramod Mittal, chairman of GIHL.

According to Mittal, GIHL has already commissioned a study on the integration plan.

The integration plan’s success, however, would hinge on finding a viable iron ore deposit in the country to make the venture cost-effective.

At present NSC has to import its raw material know as iron slabs to be able to produce its main product of hot and cold rolled coils.

Hot rolled coils (HRC) are then used by downstream steel manufacturers to produce steel pipes and tubes.

Cold rolled coils (CRC) are used for the manufacture of GI sheets and is used by automotive manufacturers.

It is estimated that GIHL will need to invest at least $1 billion if its wants to put up a basic iron and steel facility.

For the iron ore exploration alone, sources said, GIHL would have to spend around $50 million.–With Marianne Go