Power Shortage and Environmental Overload may short circuit Korean smelter project

The lack of a cheap and reliable source of electricity could leave a South Korean smelter project no other choice but to proceed with its planned establishment in Vietnam.

A recent trade mission led by City Mayor Vicente Emano and Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. (Oro Chamber) President Ruben Vegafria invited the Pohang Iron and Steel Co. (Posco) to move a proposed US$ 750-million smelting plant originally intended for that country to the Phividec Industrial Estate in Villanueva, Misamis Oriental.

The Pohang Iron and Steel Company (Posco) based in Pohang, South Korea is the third largest steel producer in the world. It operates two steel mills in South Korea, one in Pohang and the other in Gwangyang. It also operates an offshort joint venture with U.S. Steel, USS-POSCO, in Pittsburg, California.

Together with Samsung Electronics, Posco is viewed by many Koreans as a symbol of national pride and its 'can do' spirit. With the strong Korean shipbuilding and automobile industry dependent on POSCO for steel, it is generally perceived to be the bedrock of Korea's industrial development during the past 40 years.

Provincial government officials have been trying to hammer out an agreement with domestic power producers and distributors to provide the Korean investors with a power rate competitive to that offered by Vietnam.

Vice Governor Julio Uy said they are negotiating with the National Power Corporation (NPC), STEAG State Power, Inc. and Cagayan Electric Power and Light Co. (Cepalco), the exclusive franchise utility serving the Phividec, to get cheaper power for the proposed smelting plant.

Uy said they are proposing that the smelting plant secure its power supply directly from SPI to cut distribution and franchise costs the plant would otherwise incur if it sourced its electricity from Transco or Cepalco. Large industrial power users in Northern Mindanao have traditionally been permitted to directly source power from the Mindanao grid to enable them to avail of cheaper electricity.

However, industry sources say this option may no longer be open to further negotiation since Steag State Power, Inc. (SPI) which operates the coal-fired power plant has already committed to sell 200 megawatts (MW) of its 210MW output to the NPC for the next 25 years.

Despite this not-so-encouraging outlook, environmental watchdog Task Force Macajalar is nevertheless still calling for ‘genuine consultation and transparency” in all aspects of the planned establishment of the multi-billion peso smelting plant in Misamis Oriental.

Tun-an sa namo ang technical ug environmental impact ani (We'll first have to study its environmental impact),” said BenCyrus Ellorin, Task Force Macajalar spokesperson. “But for the immediate, we are calling for genuine consultation and transparency in all aspects of this project”, he added.

Ellorin cautions how ‘history would tell us, environmentally-wise and in terms of sustainable development, investments such as this one do not translate into progress, he remarked.

Yes, it may spur economic growth in one way or another but our experience with the ‘growth at all costs’ approach to development does not translate to sustainable development because of two things: 1. It is not ecologically sustainable because the ecological carrying capacity is degraded, ecological life support system is destroyed and, 2. (It is not ) culturally equitable. It does not contribute to the improvement of the over-all well-being of the people especially in the host communities and immediate environs,” Ellorin explained. “Instead it causes economic, physical and ecological dislocation.”

Green activists in the region have voiced fears the establishment of another “smokestack industry” the size of the planned Pohang steel smelter could overload Misamis Oriental’s fragile ecosystem, especially its air shed (i.e, the air supply of a given region or the geographic region that shares an air supply) which is already heavy with carbon dioxide and other greenhouse gas emissions which causes the global warming phenomenon from existing plants in the Phividec Industrial Estate.

I doubt if this development would contribute to ecological sustainability and cultural equity,” Ellorin said. “If they claim it does, let them prove it. Bottom line is to have transparent, participatory and genuine consultation on the ground,” he added.

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