Playing with lives: Obsolete equipment still used to make steel

/ 06:17 PM October 23, 2019

(Second of 2 parts)

MANILA, Philippines – The dangers of weak structures and substandard steel could not be more clearly illustrated by the wreck of buildings or homes demolished by quakes or landslides.


Poor construction is sometimes demonstrated in not-so-funny ways like the group of officials, congressmen included, who fell into murky waters when a footpath plank gave way as the team inspected a relocation site for villagers displaced by fighting between government forces and gunmen loyal to Moro leader Nur Misuari in Zamboanga City. While they were all drenched, the officials were not hurt.

Philippine authorities are taking safety seriously following reports that second hand, obsolete induction furnaces were being dumped in the Philippines after these steelmaking equipment were banned in China.


In January 2019, the Department of Trade and Industry (DTI) ordered a steel manufacturer in Pampanga province shut down for producing substandard 16 mm deformed steel bars and rerolls.

Bundles of steel bars were sealed and marked as substandard.

Big risks

Multiple reports said after China banned induction furnaces in 2017, these pieces of equipment simply found a way to markets in Southeast Asia, among them Indonesia and the Philippines.

Steelmakers in the two countries, however, found steel made in induction furnaces do not meet quality standards and posed big risks in the two countries that are often visited by storms and quakes.

According to experts cited in some reports, induction furnaces are unable to remove impurities in steel-making which accounts for unreliable quality.

Most induction furnaces in Indonesia and the Philippines produce rebar, which is largely used for construction. Watchdogs and other steel industry groups said these steel products are highly suspect.


Roberto Cola, head of the industry group Philippine Iron and Steel Industry Institute, was cited in a recent report as saying the “rebar market in the Philippines is under attack” from users of induction furnaces.

Silmy Karim, head of the Indonesian steelmaker Krakatua Steel, was cited in a Reuters report as saying that after China banned induction furnaces, these were brought into Indonesia by steelmakers who wanted to cut costs “at the expense of safety.”

Low tech

Induction furnaces lacked the capability to remove harmful elements in steel, unlike the electric arc furnace process, according to one report.

But in the Philippines, the total capacity of induction furnaces has surged to 500,000 tons from just 200,000 tons per year, according to Cola, who is also vice president of leading steelmaker Steel Asia.

The operations of such furnaces in factories mainly in Pampanga prompted the Philippine Department of Industry (DTI) and Department of Environment and Natural Resources (DENR) to form a technical working group to ensure compliance with industry standards of steelmakers.

The team would review compliance by steel producers with an online monitoring system set up by the DENR.

Trade Secretary Ramon Lopez said the move was in pursuit of United Nations Sustainable Goal No. 12 which is being pursued in the Association of Southeast Asian Nations (Asean).

Lopez had also said the DTI’s Bureau of Philippine Standards would conduct a review of the Philippine Standard (PS) certification process for steel products.

DTI moves

There would also be more intensive monitoring at the retail trade level, said a statement by the DTI in September.

The moves came after the Asean Iron and Steel Council (AISC), an industry body representing different groups in Southeast Asia, expressed alarm at the dumping of induction furnaces in Southeast Asia by China.

In a statement in November 2018, AISC said it was concerned over the movement of induction furnaces from China into Southeast Asia “to produce substandard quality carbon steel products.”

Asean, according to AISC, had become a “preferred destination for the export of obsolete and unwanted equipment from China.”

The AISC said “because of their inherent technology limitations and constraints,” induction furnaces from China threaten not only the safety of structures in the Southeast Asian region but also “the orderly development of the iron and steel industry.”

“These induction furnaces produce sub-standard quality steel products,” the AISC statement said, urging governments in the Southeast Asian region to ban the entry of such equipment if these are to be used to produce carbon steel.

Poor quality

Some reports said 90 percent of rebar, the most commonly used steel product for construction, produced in China through induction furnace was found to be substandard. Tests made for elongation and strength showed these China-made steel products easily fracture.

Following the meeting between the DTI and DENR in September, Trade Secretary Ramon Lopez said the Philippines may be progressing but what the country needed are “modern technologies that will consistently produce quality products.”

“DTI is intensifying its campaign for safer and higher quality steel products,” said a statement about the September meeting between Lopez and Environment Secretary Roy Cimatu.

In April, a DTI statement announced instructions given by President Rodrigo Duterte to Lopez—coordinate all government efforts to carry out projects to install an integrated steelmaking capability.

The order came following a presentation made by Lopez and steel maker Steel Asia Manufacturing of a five-year P105 billion expansion program.

Increasing demand

The ambitious project is already in varying degrees of construction, commissioning and full operation, the DTI statement said.

One of the investors in the project is the world’s second-biggest steel firm, Hebei Steel of China, which would operate the first integrated iron and steel plant in the Philippines.

It was a dream come true for Duterte, who had ranted against the mining industry because it simply exported ore and did not produce value-added products that could turn the Philippines into an industrial, or industrializing, country.

Under the expansion program presented to the President in April, steel production would start with ore and major intermediate products like billets and slabs, which would sharply reduce dependence on imported steel products.

Employment would jump to 21,000 from 10,500. Indirect jobs would reach 126,000. In total, steel industry jobs would number at least 300,000.

In one of his three assurances to investors during the presentation of the ambitious integrated steel program, Duterte said he would level the playing field by cracking down on substandard imported and locally-made steel which are sold cheaply.

Data from the industry showed that steel consumption is likely to rise further by 6 percent to 11.1 million tons from just 10.5 million tons in 2018. This is due in large part to the Duterte administration’s “Build, Build, Build” infrastructure program.

Taking action

About a month after Duterte gave his order to Lopez to coordinate the integrated steel manufacturing project, the trade secretary made a move to warn the public against substandard steel bars and products.

In a statement issued last May 31, the DTI said steel products produced by the company Wan Chiong should be avoided as the firm’s operations in Pampanga had been suspended for producing substandard steel bars and violating pollution laws.

Trade Undersecretary Ruth B. Castelo, who has been very active in the campaign against substandard steel products, said in October 2018 that following the AISC statement on dumping of induction furnaces by China into Southeast Asia, the DTI had been conducting without letup an investigation of steel firms that still use the obsolete equipment.

Castelo said consumers should be informed of which companies produce the steel that they would use for construction projects.

“Our consumers may not know if the construction materials they’re buying passed our standards,” Castelo said, according to a DTI statement.

“But they should at least be aware of the labeling so that they know who are the manufacturers of these products,” she added.

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TAGS: Construction, DTI, furnace, Pampanga, Pollution, Ramon Lopez, rebars, Steel, structures
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