Finnish tyre manufacturer Black Donuts Engineering Inc. has expressed its interest in constructing a rubber tyre manufacturing plant worth US$200 million (Php9.89 billion) in Mindanao, Philippines, the country’s Department of Agriculture (DA) said.
Rodolfo L. Galang, interim executive director of the Philippine Rubber Research Institute (PRRI), an attached agency of the DA, said Agriculture Secretary Emmanuel F. Piñol invited the investors to visit the Philippines for possible investments in the Davao and Cotabato areas, which accounted for a combined 42% share of the country’s total rubber output in 2016.
He said, “Black Donuts CEO Kai Hauvala and Piñol are going to visit today the place in Davao and Cotabato to get the feel of the situation.”
According to Galang, Black Donuts set up a timetable of two years for the assessment of the rubber plantations in the said areas. If the assessment results are favourable, then the company will move forward with the investment.
The rubber tyre manufacturing plant would produce at least 4 million tyres a year for regular cars, pickup trucks and other small-type trucks, Galang said.
He said a tyre is made of 40% 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.
The local rubber industry producing enough yearly requirement, around 110,000 MT a year, and the domestic consumption, according to data, is only around 30,000 MT, he said.
Galang said the remaining figure, around 80,000 MT, is being exported to Malaysia, Japan, South Korea and China.
Black Donuts would mainly produce tyres for the local market, according to the initial talks between the Finnish tyre firm and the DA. However, they may also look into exporting the tyres.
The Davao region was eyed as the prospective site of the manufacturing plant due to its strategic location in the Mindanao region, Galang said.“There’s a port in Davao, and Davao right now is considered as the centre of Mindanao. There’s an ease of access to the area via air and sea,” Galang said.
“We are hopeful the manufacturing plant would be put up by 2019 or starts its construction within the two-year time frame,” he added.
Citing data from the Association of Natural Rubber Producing Countries (ANRPC), Galang said rubber production in the Philippines in 2016 grew by 10% to 110,000 MT, from 100,000 MT in 2015.