A strong metals industry will mean a strong automotive industry (capable of supplying the metal needs of the auto firms) for the country.

[SIZE=3]Value-added products needed
to expand waning metals sector[/SIZE]

BY PAUL ICAMINA
Malaya Business Insights

June 23, 2010


Last of two parts



"Mind boggling."

This is how Dr. Rowena L. Guevara, dean of the University of the Philippines College of Engineering, describes the opportunities lost by the metals industry.

In 2009 the country lost approximately $4.5 billion to the world because of poor balance of trade. While these cover all the goods traded, a similar trend was true for the metals industry, she said.

"It is mind boggling to me how this could happen," Guevara told a conference on metals and engineering convened by the Metals Industry Research and Development Center (MIRDC) of the Department of Science and Technology.

"I can only guess that the metal products we are manufacturing are mainly for local consumption and, if there are exports, our prices could be higher than those of China, consequently decreasing the sales of our goods in the world market," she said.

She pointed out that the economy is vastly dependent on the services and manufacturing sectors, including construction, automotive and tool and die industries.


While iron or aluminum ingots, for example, are imported and the industries that shape them are in place, these metals are not locally available, she said.

"It is not surprising to find that the goods we export are outweighed by the goods we import," she said.

This need not be the case if the country goes beyond "the boundaries of our comfort zones" and address other needs such as those of the semiconductor industry, she said

Guevara said the country is blessed with gold, copper and nickel – three of the most commonly used metals. But these are only mined and purified here then exported to Japan, China, Hong Kong, Taiwan and other countries for further processing into forms the country later imports for use in the semiconductor, electronic, construction, automotive, energy, agriculture and food industries.

"It truly puzzles me why we have been importing gold and copper for the semiconductor industry when in fact these metals are right here in out country," Guevara said.

In 2009, six mining companies produced 37 tons of gold worth P53 billion. A small part of this was sold to the central bank for making gold bars, to jewelers and to dentists for fillings and crowns.

"This has long been the practice of the gold market without realizing that we could gain more by using gold for higher value applications such as in electronics, medicine, clean technology and nanotechnology," Guevara said. "These are highly priced products and would increase our profit margin for the gold that we extract and process from our natural resources."

The semiconductor industry, for one, uses gold wires 1/1,000 of an inch in diameter that serve as interconnects in the complex circuitry printed on the semiconductor chip.


Local gold bars can be reshaped into a rod that can easily be introduced into a series of tungsten carbine dies that has decreasing bore diameter until a gold wire is made.

"The basic technology for wire drawing of steel and gold should be very similar, we just have to walk an extra mile in ensuring that stringent specifications are satisfied," she said. "If we are able to do it with steel or copper, then we should be able to do it with gold."

Last year, four mining companies produced 203 tons of copper concentrates worth P11 billion. The copper cathodes and mineral concentrates were exported and instead of being processed here into wires for electrical, telecommunications, transportation and construction applications.

In 2009, nine mining companies produced 30 tons of nickel concentrates and 8,300 tons of nickel ore worth P15 billion. All these were exported instead of made into products like stainless steel, medical implants and shape memory alloys.


[SIZE=3]Guevara admits that putting value in these products is easier said than done. To be able to make the quantum jump, the country need to have the ideal number of scientists and engineers who actually do research of 3.4 per 10,000 populations. [/SIZE]


Malaysia, Thailand and Indonesia have somewhat achieved this proportion while that of Singapore is 50, South Korea a little over 30 and Japan over 50. The corresponding figure for the Philippines is 1.08, she said.

The MIRDC needs to expand its horizons by responding to the immediate needs of industries and help them add value to the metals extracted here, she said.

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