(First of two parts)

MANILA, Philippines – In 2019, the Philippines imported at least $2 billion worth of goods from China, which was Manila’s top source of imported items, among them induction furnaces that are used to produce steel.

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It’s not difficult to see why the Philippines would be in demand for steel. Everywhere you look in the country’s existing and emerging business districts, buildings are rising. On the horizon, cranes dot the skyline.

The demand for steel is increasing. In 2017, the Philippines imported $4 billion worth of steel and steel products. In 2018, the importation was already worth $5.16 billion.

It is not clear how much of the steel that goes to new buildings in the country’s rapidly growing urban centers are imported and how much are locally produced.

But among the locally produced steel are those that come from factories that use induction furnaces, equipment for steel-making that China has already banned but which are still being sold to other countries, the Philippines among them.

Chinese ‘blitz’

The Chinese government started its crackdown on substandard rebar production and induction furnaces in December 2016 in the province of Jiangsu.

The crackdown spread to other Chinese provinces with some reports calling it a “blitz.”

There was a reason for the urgency. Air pollution in major Chinese cities, contributed largely by dirty steel production processes, had killed up to 400,000 people according to some estimates.

In a report, the New York Times said in Beijing alone, only 1 percent of some 560 million people breathe air that could be considered safe.

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Induction furnaces played a major part in building up the killer air in urban centers of China and these are finding their way or had found their way, into countries in Southeast Asia after China launched a massive crackdown against the technology and equipment.

Among the countries that had become dumping grounds for induction furnaces is the Philippines, where, according to a recent Unicef air pollution report, one in four deaths is attributable to pollution.

The Unicef report said outdoor air pollution is most common in low-income, urban areas.

Taking notice, taking action

There is no available data on China-made furnaces finding their way into factories in the Philippines that churn out steel.

But, according to multiple reports, the Philippine government, mainly through the Department of Trade and Industry (DTI) and Department of Environment and Natural Resources (DENR), have taken notice and steps.

Not only were induction furnaces producing pollution, but they were also producing low-quality steel.

In China, the crackdown on the obsolete and polluting process of making steel had led to a reduction in the market of low-quality steel of 50 million metric tons per year. That’s how much the induction furnaces had produced before the crackdown, according to some reports.

In a press statement last Sept. 3, the DTI said it and the DENR are enforcing “stricter environmental standards and more modern and cleaner technology” in steel-making.

The two departments, according to the statement, agreed to review current environmental standards and technology used in steel-making “considering reports that several induction furnace facilities have been set up.”

These facilities, the statement said, “can be more pollutive and produce inconsistent quality and nonconforming steel products.”

Modern and clean

“What we need,” Trade Secretary Ramon Lopez was quoted as saying by the statement, “are modern, environment-friendly technologies that will consistently produce quality products.”

“We do not want those used pollutive induction furnaces to transfer to our country,” Lopez said.

The trade secretary said by collaborating with the DENR, the government could promote “industrial capacity-building with the use of advanced technology in steel-making while protecting our environment.”

“This is also a testament that as we drive economic growth, we encourage responsible businesses in the country,” Lopez said, according to the statement.

The DTI-DENR partnership came months after the rest of Southeast Asia also paid attention to the dumping of induction furnaces, banned in China, into the region.

In February 2018, according to multiple reports, the Asean Iron and Steel Council (AISC) appealed to governments in Southeast Asia to ban the importation of what a statement from the AISC said were “obsolete” induction furnaces.

The AISC said while the Chinese government already outlawed the use of these steel-making equipment, there was no law in China that prohibits the shipment of these equipment to other countries.

Favored dumping ground

The region, the AISC said, “has also become a preferred destination for the export of obsolete and unwanted equipment from China.”

“Countries like Indonesia, Malaysia, Philippines and Thailand have reported increased activities in this direction,” said the group.

AISC’s “main concern,” its statement said, was that Asean is becoming a “dumping ground of these obsolete and outdated machinery and equipment.”

AISC said induction furnaces emit “uncontrolled harmful gases and particulates and consumer higher electrical energy than electric arc furnaces.”

Images of thick smoke coming out of steel plant chimneys have become familiar in China and are also threatening to be the norm in many Southeast Asian industrial sites, including those in the Philippines.

This has worried Philippine trade officials. Trade Undersecretary Ruth Castelo is one of them.

In a report by Reuters, Castelo said she had visited three steel plants using induction furnaces and found these without or lacking anti-pollution measures.

“It’s not safe even for the workers and the neighboring areas,” said Castelo in that report.

Cover of darkness

There’s been little reporting about the pollution being caused by the induction furnace steel factories, many of which are in the province of Pampanga. Most begin their operations at night when the darkness could be an effective cover for the smoke that their plants emit.

The Philippine government, however, could not be deceived by the darkness-cloaked operations.

In November 2017, the DENR issued a statement saying that Environment Secretary Roy Cimatu gave an order to investigate five steel mills for violating Philippine environmental laws.

“Given the veracity of the allegations, the investigation must be completed as quickly as possible so that we can take immediate measures to address the problem and, if necessary, hold these companies accountable for their pollution,” Cimatu said then.

The steel factories are all based in Pampanga province.

Aside from pollution, the factories were also accused of violating labor laws.

The DENR statement said two groups—Philippine Association of Free Labor Unions (Paflu) and Clean Air Philippines Movement Inc. (Capmi)—asserted that air pollution at the five steel factories exceeded maximum levels set by the World Health Organization (WHO).

Confidential probe

According to the DENR November 2017 statement, Cimatu has ordered the Environmental Management Bureau (EMB) to investigate the steel factories.

But Jerry Capulong, air quality management chief of the EMB, said the investigation was confidential and “the release of information is sensitive.”

The DENR statement, however, said Cimatu wanted the investigation focused on possible violations of the Clean Air Act of 1999.

Trade Secretary Lopez, in the DTI’s September 2018 statement, said there was to be a study on requiring environmental compliance certificates (ECC) for heavy industries considered as critical to be made at the national level.

This, Lopez said, would hit two birds with one stone—ensure a more comprehensive and faster review of ECC applications and pave the way for “more intensive environment and production monitoring of steel-making facilities.”

On the agreement with the DTI, Cimatu said the EMB and the Mines and Geosciences Bureau (MGB) would be coordinating with the DTI to make sure environmental standards are not set aside in steel-making.

Lopez said the DTI and DENR are also studying a proposal to regulate the use of second-hand equipment or machinery in the steel industry amid the uproar on the dumping of Chinese induction furnace facilities into Southeast Asian countries.

(Next: Compromising safety through obsolete equipment)

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