Private consortium to establish steel mill at Kalabagh

By Ijaz Kakakhel

ISLAMABAD: A consortium of eight local steel manufacturers on Thursday offered to develop iron ore deposits of Kalabagh and establish a steel mill having a capacity of one million tonnes per annum.

The offer was made in a meeting of follow up committee on steel workshop held on 25 January this year. Mohsin Syed, Member Board of Management of EDB presided it. The consortium informed the participants that a Chinese company had expressed readiness to transfer technology related to extraction of mines at Kalabagh.

However, they said main hurdle in establishing a steel mill at Kalabagh was the provision of land on lease as well as the provision of roads, rails, gas, power and other infrastructure related facilities. They lamented that all infrastructures related facilities were provided to foreign investors but the local were denied such provision. Main purpose of establishment of steel mill at Kalabagh was to utilise locally extracted iron ore.

In order to resolve all such issues confronting steel sector, the consortium would meet in Lahore on 24th April. During the meeting they would sort out the issues pertaining to logistics like railways and leasing of mines. The Engineering Development Board was asked to take up the issue with the concerned authorities and present a progress report in the proposed meeting.

For purchase of heavy machinery, the private stakeholders demanded the government to purchase machineries and provide them on rent to the stakeholders. But the committee stressed on private sector to make investment in heavy machinery and also forward it on rent to others. “If the government purchase the machinery, then several problems will arise like, where to keep it and maintenance of the machinery would also be a problem,” the committee added. However, the committee ensured the stakeholders that government would provide various incentives in this regard including exemption from various taxes.

The private stakeholders were asked to establish an action plan for enhancing investment in steel sector of the economy. The committee recommended that Pakistan Steel Mills should simultaneously increase its steel prices with the increase in international market so that the importers could comfortably import the raw material. This measure would help arrest the shortage of raw material. It was also proposed that Pakistan Steel might adjust steel prices after specific interval on the pattern of petroleum products. At present 20 percent steel demand was met through local resources and the remaining 80 percent through imports. Main purpose of linking the prices of steel products with international market was to ensure smooth supply of steel products across the country.

The committee emphasised the need for preparation of an action plan by private sector for encouraging new investment in the steel sector so that the government could facilitate the local investors. A majority of them pleaded for level playing field and suggested that the government should extend the same support as being extended to foreign investors. The representatives of the industry raised the question of abolishment of custom duties on steel products as reported by a section of press.

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