The proceeds from the loan will be used as working capital for SteelAsia’s operations, which rely on Electric Arc Furnace (EAF) technology.
‘Green steel’
Combined with renewable energy and steel scrap recycling, the process enables the production of green steel with significantly lower carbon emissions compared to traditional steelmaking methods.
SteelAsia said its Calaca steel mill in Batangas has been producing green steel since 2008 and was assessed by Norway-based certification firm DNV as among the greenest steel facilities globally.
The company said the plant’s carbon footprint is about 90 percent lower than the global average for conventional steel production.
Expansion plans
SteelAsia plans to replicate its low-emission steelmaking model in upcoming facilities, including the country’s first medium sections mill in Lemery, Batangas, which is expected to begin operations within the year.
The green loan is the company’s first financing facility under its Sustainable Finance Framework, which received a high rating from Moody’s in February for its sustainability standards in the steel sector.
The framework is designed to ensure transparency, strong governance, and the consistent use of proceeds for sustainability-related projects.
The deal also marks a milestone for both parties. SteelAsia became the first steel company in the Philippines to secure a green loan from Cathay United Bank, while the transaction also represents the bank’s first overseas green loan to a steel manufacturer.
“The green loan represents more than a milestone for the company—it is a sign that we are indeed on the right track in our expansion strategy,” said SteelAsia president and co-chief operating officer Rafael Hidalgo.
“Steel production with low CO2 emission is not only sustainable for the environment, it is also the foundation upon which we are building the country’s steel industry,” he added.
Shared goals
Cathay United Bank said the financing agreement reflects its commitment to supporting sustainable development initiatives in the region.
“Cathay United Bank is proud to be part of these initiatives,” said Tony Chao, senior vice president and GM of Cathay United Bank-Manila Branch.
“We are driven to further strengthen our sustainable financing partnership with SteelAsia, as we share a common mission and set of goals. We look forward to our shared success in this endeavor,” he added.
Since establishing its Manila branch in 2015, Cathay United Bank has expanded its environmental, social, and governance (ESG) financing portfolio in the Philippines.
The bank was among the first lenders in the country to launch a Sustainability-Linked Loan in 2022 and has since introduced other sustainable finance products, including Sustainable Time Deposits.
Cathay United Bank also provides corporate banking services such as trade finance, foreign exchange, remittance, and corporate financing to local businesses.
Industry impact
SteelAsia is one of Southeast Asia’s largest rebar producers and currently operates four rebar mills across the Philippines.
The company estimates that it supplies around 80 percent of the steel used in infrastructure, high-rise buildings, and heavy construction projects nationwide.
Over the next four years, SteelAsia plans to build additional green steel mills in Batangas, Quezon, and Tarlac as part of its expansion program.
The company estimates these projects could help avoid up to 7 million tons of carbon dioxide emissions annually, reinforcing its goal of helping modernize the Philippine steel industry while supporting climate and sustainability targets. —Corrie S. Narisma
