The country’s dream of having its first homegrown tire maker is moving closer to reality, as the Department of Agriculture (DA) announced that it will sign the memorandum of agreement (MOA) with Finnish tire-manufacturing company Black Donuts Engineering Inc. by September, formalizing the firm’s feasibility study for the construction of a $200-million rubber- tire factory in Mindanao.
Agriculture Secretary Emmanuel F. 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 finalize the agreement for Black Donuts Engineering to conduct a feasibility study for a tire 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 on Monday. Piñol added the feasibility study would only take about two months.
The DA chief said the establishment of PATM, the first homegrown tire-manufacturing company in the country, would help stabilize the price of local raw rubber by giving farmers an assured market for their produce.
“We expect the tire factory to stabilize 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 stabilized,” Piñol said.
“Look, even when the price of raw rubber declines, the price of tire 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 first homegrown tire-manufacturing company. The signing of the MOU was held in Malacañang and was witnessed by President Duterte and Trade Secretary Ramon M. 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 percent share in the country’s total rubber output in 2016.
In an interview in January, Rodolfo L. 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 tires a year.
The tires are suitable for regular cars, pickup trucks and other small-type trucks, Galang said.
He added 40 percent of the tire to be produced will be made of natural rubber, which averages around 10 kilograms per tire. The goal of producing 4 million tires per year would require at least 16 million kilograms of rubber, or 16,000 metric tons (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 percent of the country’s rubber production, according to government data.