China's MCC Eyes $1.5bn Philippine Steel Plant

China Metallurgical Construction Group Corp is considering investing at least $1.5bn in an integrated steel plant in the southern Philippines, and is also looking at potential mining sites, a government official said on Wednesday.

Philippine Environment and Natural Resources Secretary Lito Atienza said he met officials of MCC, a state-backed Chinese firm that specialises in developing mines and metals smelters, earlier this week in the capital Manila to discuss the steel project.

"They're willing to invest $1.5bn, and even more if they need to, for the integrated steel plant," Atienza told Reuters in a telephone interview.

He said MCC is looking at Zamboanga del Sur province on the southern island of Mindanao as a potential site for the facility.

On Tuesday, Japan's Sumitomo Metal Mining Co Ltd said it was considering building a $1.7bn nickel processing plant in Surigao del Norte province, also on Mindanao.

Apart from processing iron ore, MCC is also interested in mining for copper and gold in the Phillipines, said Atienza, adding MCC officials were returning to Manila on 20 October for further discussions.

MCC operates mines in Papua New Guinea, Pakistan and Argentina, among others. In July Russian steelmaker Evraz Group joined forces with MCC to develop the Cape Lambert iron ore project in Western Australia.

"We're inviting the big players so they could go into building processing plants rather than go into just mere extraction of minerals," Atienza said.

The Philippines, which sits on top of an estimated $1tn worth of unexplored copper, gold and nickel deposits is trying to attract foreign investors into its mining sector, one of the world's largest and most profitable in the 1970s.

But the global financial crisis has made it difficult for many companies to raise funds.

Manila had to push back its target of drawing $10bn in mining investments by one year to 2012, from $1.7bn so far since 2004 when the Supreme Court cleared a law allowing foreign firms to own 100% of local mining projects.

By Manolo Serapio Jr, Reuters