TKC Steel Corp. is allotting P400 million for the purchase of a blast furnace facility for its steel production operations in Iligan City.
In a recent filing with securities regulators, TKC said the blast furnace facility will be integrated into primary iron making to have an alternative source of raw materials input aside from scrap metal. This process will utilize local iron ore and coal to extract molten iron or pig iron for conversion into steel.
TKC said the facility, once operational, would increase its billet producing capacity to 600,000 metric tons annually from the current 300,000 MT per annum.
TKC said the facility will ensure a better consistency for molten steel as well as improve cost efficiency since the mineral is projected to be cheaper than steel scrap.
TKC president and chief operating officer Anthony S. Dizon said the equipment, which the company expects to start operating by the latter part of 2008, will be financed from proceeds of its planned P2.7 billion follow on offering in November this year.
The company is selling a total of 235 million common shares at a price ranging from P8 to P11.50 per share.
Other proceeds from the additional share issue will be used for the repayment of a short-term bank loan which will mature in January 2008 (P200 million), for the expansion of Treasure Steel Corp. (P450 million to P500 million) and China-based unit Zhang Zhou Stronghold Steel Works Co. Ltd. (P700 million to P1.4 billion).
Treasure Steelworks operates a billet-making plant in Iligan City, Lanao del Norte. The plant, formerly owned by National Steel Corp., is the largest in the Philippines with an installed capacity of 300,000 metric tons.
Zhang Zhou, on the other hand, manufactures spiral pipes and electric resistance welded pipes for general construction, water transmission, and oil and gas applications with a production capacity of 200,000 metric tons of finished pipe products per year.
TKC Steel is part of the Tiu Group of Companies that owns a wide range of businesses from financial servicing to hospitality and tourism. Among these companies include iRemit, an overseas remittance services company, Sterling Bank of Asia and the Discovery Hotel chain.