Finnish tyre firm to launch feasibility study for PH tyre plant

May 31, 2017

PH-tyre-plantFinnish tyre maker Black Donuts Engineering Inc. will be launching its feasibility study for the construction of a US$200-million rubber tyre factory in Mindanao, Philippines after the signing of a memorandum of agreement (MOA) in September with the country’s Department of Agriculture (DA).

Agriculture Secretary Emmanuel Piñol made the pronouncement following his recent trip to Finland, where he met with the officials of Black Donuts for the establishment of Pilipinas Agila Tyre Manufacturing (PATM).

“We were able to finalise the agreement for Black Donuts Engineering to conduct a feasibility study for a tyre factory in the Philippines. We expect to go back to Finland in September, and we expect that, by that time, we will sign the MOA between the Philippine Rubber Farmers Association (PRFA) and Black Donuts for the start of the feasibility study,” Piñol said in an interview with reporters. Piñol added the feasibility study would only take about two months.

The DA chief said the establishment of PATM, the first home grown tyre manufacturing company in the country, would help stabilise the price of local raw rubber by giving farmers an assured market for their produce.

“We expect the tyre factory to stabilise the price because when your rubber is dependent on the world market prices, then we will be really affected whenever the price drops. But if we have a local demand for our raw rubber, then the price will be stabilised,” Piñol said.

“Look, even when the price of raw rubber declines, the price of tyre doesn’t because rubber is a traded commodity. That’s why there’s instability in price. But if we have our own local factory, then the price of our raw rubber would be stable,” Piñol added.

In March, a three-way memorandum of understanding (MOU) was inked by the DA, PRFA and Phoenix Petroleum Philippines Inc., agreeing to invest for the construction of PATM. The signing of the MOU was held in Malacañang and was witnessed by President Rodrigo Duterte and Trade Secretary Ramon Lopez.

Under the MOU, PATM would source its rubber requirement from members of the PRFA.

In January,Piñol invited the executives of Black Donuts to visit the Philippines for possible investments in the Davao and Cotabato areas, which accounted for a combined 42% share in the country’s total rubber output in 2016.

In an interview in January, Rodolfo Galang, interim executive director of the Philippine Rubber Research Institute, an attached agency of the DA, said the proposed 50-hectare rubber manufacturing plant could produce at least 4 million tyres a year.

The tyres are suitable for passenger cars, pickup trucks and other small-type trucks, Galang said.

He added 40% of the tyre to be produced will be made of natural rubber, which averages around 10 kg per tyre. The goal of producing 4 million tyres per year would require at least 16 million kg of rubber, or 16,000 metric tonnes (MT) annually.

“We are producing enough yearly requirement, around 110,000 MT a year, but our consumption, according to our data, is only around 30,000 MT,” he said.

Mindanao accounts for 99% of the country’s rubber production, according to government data.

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