No .. it's good sheetmetal. Looks like something was dropped at some point and chipped the paint. There's no rust (though it's dirty... haven't started on it yet)
It's top of the fender well. That plug is where the headlight wiring runs
I feel like that whole area will need to be stripped to avoid the footprint of the chip
I'm just a backyard body man I just do what I know from experience but knowing of all the contaminants under the hood of our old cars getting into the paint and the battery acid and everything I stripped mine to metal and started over.
Seemed to be simpler in the long run.