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MANILA, Philippines – Diversified conglomerate San Miguel Corp., the country’s biggest business group, is going full blast in its expansion into the extractive industry.
In a press conference on Thursday, May 23, San Miguel president Ramon Ang said the group is investing heavily in the cement and mining businesses.
Ang said San Miguel is pouring as much as $750 million to increase the capacity of Northern Cement Corp. (NCC), which San Miguel chairman Eduardo “Danding” Cojuangco Jr. controls.
For mining, San Miguel is eyeing to acquire a controlling stake in Nonoc Mininc and Industrial Corp. that owns a nickel mine in Surigao. Ang said they have offered $75 million to pay off the mine’s debts with the government.
In March, San Miguel had said it is eyeing entry into another capital intensive extractive industry. Ang said they are looking to invest as much as $25 billion into an upstream oil and gas exploration project abroad.
Leader in cement business
San Miguel is bullish about the cement industry as the Philippines has a per capita consumption of 170 kilos, far lower than the per capita consumption of 1,000 kilos in other countries.
“SMC (San Miguel) is very bullish in that business,” he added.
San Miguel already owns 35% of Northern Cement after it injected P3 billion in fresh equity into the cement maker, which Ang had managed and turned into profitable venture when Cojuangco was in exile after former President Ferdinand Marcos was booted out of power in 1986. Cojuangco was an ally of Marcos.
Ang said the group expects a share of about 30% of the local cement market, which is currently 90% controlled by foreign-owned cement companies.
“SMC plans to put up more cement plants and become a dominant player in the cement industry,” Ang added.
Part of the plan is to invest $250 million to triple the capacity of Northern Cement’s existing plant in Sison, Pangasinan to 3 million metric tons from one million metric tons.
Additional $250 million will be spent to put up a new plant in Southern Luzon with a capacity of two million metric tons, and another $250 million more to establish another plant in Cebu.
San Miguel intends to put up at least 5 more cement plants all over the Philippines in the next 5 years.
Nonoc Mining
San Miguel is also moving forward with its plans to acquire the nickel mine in Surigao that has been locked in a legal and financial quagmire.
Ang revealed that San Miguel has offered $75 million to the state-run Privatization and Management Office (PMO) to acquire a controlling stake in Nonoc Mining and Industrial Corp.
The PMO, an agency under the Department of Finance, is overseeing the handling of the unpaid debts of the nickel mine’s former owner, Philnico Mining and Industrial Corp, which bought the refinery from the government in the 1990’s.
Philnico has an outstanding debt of $263.8 million to the national government and P200 million unpaid real property taxes to the city government of Surigao.
Ang said San Miguel and Philnico have entered into a memorandum of understanding last December regarding the payment of debts.
In January, San Miguel told the Philippine Stock Exchange that it is working out an agreement with the Surigao local government on offsetting the unpaid tax obligations by financing expansion plans of the Surigao City airport.
SMC is planning to inject $2.5 billion to reopen Philnico’s mothballed refinery plant in Nonoc as payment for the unpaid taxes.
Earlier, Chinese firm Jinchuan Group Ltd had also considered spending $1 billion to rehabilitate the refinery, but eventually dropped the plan.
San Miguel has 3 other small coal mines in South Cotabato province. The local government, however, has a standing order not to allow open pit mining, which is the preferred extraction mode for San Miguel’s small mines. – Rappler.com
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