Philippine Associated Smelting and Refining Corp.

(PASAR) as private enterprise: A new era for the countrys only copper smelter refinery
The Philippine STAR Business, pages B-6 & B-7, November 24, 2003

After more than 20 years in the hands of the government, the countrys only copper smelter and refinery located at the Leyte Industrial and Development Estate in Isabel, Leyte has gotten a new lease in life. As part of the governments move to privatize state-owned firms in the 1990s, the plant was acquired by a private consortium led by Swiss metals firm, Glencore International AG. Now, four years operating as privately-owned corporation, the Philippine Associated Smelting and Refining Corp. (PASAR) has been infused with fresh capital, state-of-the art technology and global management expertise to keep it running and competing in the international arena. The new era for PASAR has dawned with an $85-million investment into the company for the five years. Since 1999, $32 million has already been spent to upgrade and refurbish the plant. The challenge, said Bruce Anderson president and chief executive officer of PASAR, is to modernize the 20-year-old plant and keep it running in good working condition round the clock. The copper smelter and refinery was built in 1983, with a capacity to produce 138,000 metric tons of electrolytic copper cathodes. It was upgraded in 1993 to its current production capacity of 172,500 metric tons of LME Grade A copper cathodes per year. In an interview, Anderson told The STAR that another plant expansion and upgrade is planned for next year, not to mention the extensive training the company is continuously providing its team of engineers and plant workers to operate the plant in its full capacity. Established in 1976 as the first of eleven major industrial projects of the government, PASAR primarily produces electrolytic copper cathodes, the raw material used in the manufacture of various kinds of electric cables, telecommunication wires, copper shapes and copper-based products. PASARs copper cathodes meet the specifications set by the British Standards Institution and the American Society for testing Materials. The brand is also registered with the London Metal Exchange (LME), the Commodity Exchange (COMEX) in New York and the Shanghai Futures Exchange. Anderson disclosed that the copper smelter plants full capacity is 200,000 metric tons of new copper while the refinerys output 172,500 metric tons of finished products. The goal, he said, is to match the smelter output with the refinery. PASAR also produces granulated slag used as a low-cost abrasive in sandblasting, especially in the ship repair and construction industries; iron concentrates used as an additive in cement production; selenium powder used mainly for making components of electrical equipment like photocopiers, lasers, and voltage regulators; sulfuric acid for fertilizer production and the manufacture of industrial chemicals; refined copper anodes; and dor metal. The 80-hectare copper smelter and refinery in Leyte includes pollution abatement facilities, port and bulk handling facilities; an airstrip, a medical facility and housing, recreation and educational facilities for company personnel and their dependents.

Its location is strategic as it has access to electric power from the Tongonan Geothermal Power Plant. The facility also has a deep-harbor facility with a guaranteed draft of 9.5 meters and capable of handling vessels up to 20,000 DWT. One of the key challenges of running a copper smelter and refinery complex, which supplies an increasingly competitive copper market in Asia, especially Japan, China and Korea, is to leverage the product at a cost-effective rate. This means keeping overhead cost down while maintaining world-class efficiency, Anderson said. When the new investors took over PASARs management in 1999, it has adopted a pro-people approach. While restructuring the organizational set-up, the strategy was to retain the companys employees, retrain them for new skills and orient them in the new vision and direction of the company. It wasnt really a very difficult process because the workers are very professional and highly-skilled, said Anderson. The challenge, he said, is more in the area of introducing a new mindset that as a private company, PASAR needs to become a profitable enterprise. We have to make employees understand that they have to take an active interest in the plant since its performance is their life, their job, their community, he said. Now, the company employs 1,000 highly-trained personnel, mostly from the host locality and provides livelihood opportunities for the host local community. At this point, Anderson believes that the companys most important asset is its people. Second to its heavy investment in refurbishing the plant is its huge budget for human resource training to prepare people fro various responsibilities in the company and for enhancing productivity and plant safety. This effort has already paid off when the Safety Organization of the Philippines has given PASAR a recognition when it recorded its nine millionth man-hours with no lost time. The new PASAR chief executive has also introduced a very open management style into the company. I allow the full participation of the staff in the management of the company, he said. Thus, even with an $800 million debt inherited from the government, and the large capital outlay for its expansion and plant upgrades, Anderson is confident that it can recoup its investments in the target period. Our goal is to be self-sufficient financially. That way we can finance our projects from the proceeds of the business, he said. Anderson is pinning his hopes on the increase of copper prices in the world market and stable copper supply. Currently, copper output is very good. However, if the world demand for copper increases, we will be in a very good position to gain a headway financially, he stressed. Right now, however, the companys focus is on operational efficiencies and creating an environment conducive for the company to achieve its target of becoming the best copper smelter and refinery in Asia and the preferred provider of quality products one day at a time.