DBP to lend P5.7B to Compostela Steel Inc.

State-owned Development Bank of the Philippines (DBP) has inked a P5.7-billion long-term loan agreement with Compostela Steel Inc. (CSI) to finance the construction of its steel-making facility in Cebu.

Under the agreement, the proceeds of the loan will be used to partially finance the Compostela Works Rolling Mill with a required total capital of P8.3 billion. The balance will be invested by parent company Steel Asia.

Construction for the facility in Compostela, Cebu started in 2019, with the project estimated to generate as much as 3,000 direct and indirect jobs.

"As the premier infrastructure bank of the country, financing projects that enable the local construction industry to be self-reliant in steel is a developmental priority, as it further improves the country's infrastructure landscape," said DBP president and chief executive officer Emmanuel Herbosa.

"If we can boost the local production of construction supply materials, the country can lessen its dependence on imports, while stimulating the local economy amidst this national public health emergency," he added.

The second phase of the project is also expected to expand the facility's capability to produce wire-rod, which can substitute imports and support downstream small-scale manufacturing businesses.

"We hope that through this long-term financing deal, DBP will do its share in enhancing the competitiveness of strategic local industries such as steel manufacturing," said DBP executive vice president Jose Gabino Dimayuga.

According to Dimayuga, the Philippines currently has no wire-rod manufacturing capacity as it relies solely on imports from neighbors such as China, Indonesia, Malaysia, and Vietnam which total over $350 million annually.—AOL, GMA News