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13. July 2017

PHILIPPINES: Udenna investing in USD 200 million rubber manufacturing plant in Mindanao

Udenna Corp., the holding company of businessman Dennis Uy, is investing in the country’s first-ever rubber manufacturing plant, an official of the Department of Agriculture (DA) said.

DA-attached agency Philippine Rubber Research Institute (PhilRubber) said Udenna would now serve as the new corporate vehicle for Uy’s investment in the USD 200 million rubber plant in Mindanao instead of Phoenix Petroleum Philippines.

“Udenna is bigger. Phoenix is limited to distribution and storage of petroleum only. We will be signing a new MOA (memorandum of agreement) with Udenna,” PhilRubber executive director Rodolfo Galang told The Philippine Star.

He said PhilRubber and Udenna are in the process of forming committees that will conduct a feasibility study on the rubber plant.

Udenna is also expected to ink another agreement with Finland-based tire company Black Donuts Engineering Inc., which will build the plant.

“Black Donuts will do the proposal for the factory, then Udenna and the DA will have to look at it and assess and evaluate. The feasibility study is targeted to be finished within the year,” Galang said.

However, Galang clarified that the USD 200 million investment may not entirely come from Udenna as the agency is also open to inviting other interested parties.

Black Donuts, which is involved in the establishment of several tire factories globally, earlier pledged to help explore sources of funding for the project.

The planned manufacturing plant will cater to domestic consumption for the production of tires for passenger vehicles, cargo, small pick-ups and agricultural machineries.

It is estimated to produce four million tires per year. One tire averages 10 kilograms and is composed of 40 percent natural rubber from the estimated 130,000 hectares of local rubber farms.

This will translate to about 16,000 metric tons more of rubber to be planted and produced annually.

Also part of the plan is the installation of a new line that will manufacture motorcycle and bicycle tires. This is expected to employ about 800 Filipinos.

Data from the Philippine Statistics Authority (PSA) showed majority of the total rubber production comes from Zamboanga Peninsula and the Soccsksargen.

At present, there are only 25 manufacturing and processing plants nationwide, majority of which are into the production of tires.

The country’s P12-billion rubber industry remains underdeveloped compared to other countries such as Thailand and Malaysia.

This is due to the inadequate supply of quality planting materials, low productivity and poor handling, resulting in low-quality rubber.

Poor rural infrastructure, less investments from private and public sectors and lack of marketing and promotional initiatives in the global market have also contributed to the poor performance of the country’s rubber industry.

Source: Daily “The Philippine Star”, Manila; 11 July 2017

(Syed Rashid Ali, Karachi, Pakistan)

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