ILIGAN — Global Steel Philippines, Inc. is optimistic on the company’s near-term prospects with the recovery of steel prices in the world market. In a phone interview, a company executive also denied reports that the Indian-owned steel mill complex would soon shut down.

Sangram Mohanty, Global Steel’s vice-president for corporate communications, said the company would even sell new steel products from its 140-hectare steel mill, previously operating as National Steel Corp. before Global Steel took over from a consortium of creditor-banks five years ago.

The Department of Labor and Employment in Northern Mindanao reported in the first quarter that Global Steel was among exporters in the region hit by the global economic downturn. As a consequence, the firm imposed reduced working hours on about 1,100 workers of the steel mill complex.

Local reports claimed the steel company has been operating on a per-order basis since the start of the year and that in effect, the workers have been on forced leave since December. In previous months, workers were even seen in front of the steel plant protesting over labor issues.

Still, Mr. Mohanty said the company is committed to its workers. "We are retaining our workers. We have not laid off a single worker and no employee has been terminated," he said. But he admitted that the company, like many export-oriented industries, was badly affected by reduced demand for steel products.

"There was reduced capacity of 40% all over the world, but now market prices are going up," said Mr. Mohanty, adding that this would allow the company to increase production in the coming months.

"This is an indication that the steel market and the steel industry [prospects] look brighter," he said.

Aside from external factors putting pressure on Global Steel’s operation, the city government is claiming that the steel mill complex still owes the local government up to P2.3 billion in taxes that have accumulated from the previous liabilities of National Steel Corp.

Global Steel acquired ownership of National Steel’s assets in 2004 after parent Global Infrastructure Holdings Ltd. won the bidding, besting LNM Holdings N.V.

It offered a P1-billion downpayment and an eight-year payment scheme for the balance of the purchase price of P12.25 billion. National Steel owed P13.8 billion to a group of banks led by the Philippine National Bank.

Mayor Lawrence L. Cruz, in previous interview, said the Iligan city government would be willing to grant a tax amnesty to Global Steel in exchange for more investments, which means further expansion of the company’s operations in the city.

"We want to be sure that if ever we would offer the tax amnesty, it would help the company reactivate and invest, produce more products, and employ more people," said Mr. Cruz. He noted that the city government had accepted a partial payment, but this does not mean condonation of the penalties that have mounted over time.

Earlier reports quoted Trade Secretary Peter B. Favila as saying that Global Steel management should open its doors to a partnership, or even selling its stake since many investors have expressed interest in taking over the Iligan steel plant. Lalit Kumar Sehgal, Global Steel’s managing director, had responded that its Philippine steel mill complex was not for sale.

Mr. Mohanty said the steel mill would soon be launching new products, noting that production stands at only 15,000 metric tons of steel.

"We’ll be increasing steel production to 80,000 metric tons next year," said Mr. Mohanty.

Global Steel is said to be investing $100 million on the Iligan plant.

"We will be producing special steel for gas cylinders and we have applied for American Bureau of Standards certification for this product, which will have a Grade-A quality," he told BusinessWorld.

"This will be the first time such product will be produced in the country," added Mr. Mohanty.