“WE are now smelting.” Thus declared Davao City investor Leonardo A. Fernandez in announcing to the world that his iron ore venture in Zamboanga Sibugay will not only be extracting rich iron ore deposits, but his company, Mt. Zynai Mining Co. (MZMC), will smelt these ores into final steel products for Philippine use.

This will be the country’s first smelting activity, an important ingredient in any country’s industrial dream, and it will happen four years from its inauguration on June 17, along with 100 hectares of land for an envisioned industrial park in Diplahan town.

“This is important for our industrialization, because this smelting plant will bring several benefits from now. We can bring down the volume of steel imports and cost of construction, we can generate 1,000 factories around our smelting plant, we can generate 20,000 jobs,” he told reporters the night before the MZMC inaugurated the projects. This will also be the site of an industrial park some 52 kilometers southwest of Pagadian City.

The industrial park will host the smelting plant and other accessory facilities and will cover the 50 hectares of the park. The remaining 50 hectares will be allocated to outsiders in other mining-related ventures.

The construction of the smelting plant and the industrial park would cost $1 billion.

FERNANDEZ said they bought from China two drilling machines, each costing $200,000, to conduct further geological and metallurgical studies to determine a more proximate estimate of the deposit, although his partner from Shenzhou Investor Corp. has initially evaluated the area in Bayog to be “very big.” Bayog is in the central portion of the Zamboanga Peninsula north of Diplahan. Bayog is described to be part of the so-called iron ore corridor.

The drilling will also determine the kind of iron ore deposit, as well as the other minerals present in the area.

The company expects the corridor to have a volume of as much as 500 million metric tons to allow the MZMC to design its smelting plant of 3-million-metric-ton production capacity each year.

At this capacity, it could cut down nearly half of the annual importation of steel billets from China, which charges $24 per ton. Each ship carries 50,000 metric tons of these steel billets.

Mindanao has its own steel processor, Steel Asia, located in Barangay Mahayag in Davao City, but he said Steel Asia and the rest of the nine other steel processors are importing a total of seven million metric tons of the billets. Steel Asia processes these billets into deformed bars to supply the needs of Mindanao, he said.

“Even our National Steel Corp. is importing these billets as well as recycling the iron to process them into deformed bars,” he said. “But we never had our own smelting plant. This time, my company extracts the ore and we will process them into billets and other steel products in our smelting products.”

“My target is to kill this dependence on steel from China and to bring down the cost of construction in the Philippines,” he added.

“Even if we can cut down the importation by only half, it would already create an impact on local prices of steel products, and that would be a huge benefit to the country’s economy,” Fernandez,  president and CEO of MZMC, said.

At the initial phase of commercial production, the MZMC would produce 1.5 million metric tons and double that in two years.

ALL this would be made possible by MZMC’s partnership with the Chinese firm, whose chairman, Ninchy Lin, assured Fernandez that Shenzhou Investor Corp. would allow MZMC to sell wholly to the Philippines all the steel that would be produced by the smelting plant.

Fernandez said earlier that their agreement was on 60-40 terms, the bigger percentage going to the Philippine market. When pressed for further comment, Lin reiterated that all that would be produced by MZMC may be sold in the Philippines “because we know that the Philippines is really in need of steel.”

Fernandez said his operation would also involve coal mining. Why? “Because coal would be important to our electricity requirement and these areas—Zamboanga Sibugay, Zamboanga del Sur and Zamboanga del Norte—have rich deposits of coal.”

He added: “That is why many of the farm areas here have no lot titles because of the rich mineral deposit in these areas.

“This place is really blessed with a lot of minerals and many have not been mined,” he said.

Fernandez’s MZMC acquired on February 3 the right to explore and develop the 2,637-hectare MPSA (Mineral Production Sharing Agreement) No. 349-2010-IX located in Midsalip, Zamboanga del Sur, and Siayan, Zamboanga del Norte, from Czarstone Mining Corp, also a Filipino-owned mining company.

The MZMC also negotiated with the Subanen tribe to mine the iron ore in Bayog, which would cover some 15,000 hectares.

A separate mining operation was being negotiated also with the Subanen tribe in Diplahan, Zamboanga Sibugay, this time to extract coal in a patch of land measuring 2,000 hectares.

“The said acquisition ensures a steady supply of raw materials for the steel mill and smelting plant at the industrial park,” he said. Processing of iron ore will be done at the industrial park to be established inside a park complex in Barangay Santa Cruz, Diplahan. The municipality of Diplahan is the field operations office of the mining company.

This month, Palafox Associates and Architecture will start the planning of its industrial park and the smelting plant.

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