development of steel industry of pakistan

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Development of Iron and Steel Industry of Pakistan United Kingdom in their colonial rule in India developed a strong base of steel industry in the subcontinent. The main purpose was to develop a large network of railways so that Britain can easily transport trade goods within India and bring those goods to sea ports from where they would be taken to Europe. Early Years of Pakistan After the partition of Subcontinent in 1947, India had 3 steel producing plants whereas Pakistan’s share of Iron and steel industry was 2 producing units. i. North-Western Railway (Mughalpura, Lahore) It was operated by government and it contained 3 ton Arc Furnace 18 th century Bridge Crain to move ladles ii. Mukand Iron and Steel Works (Badami Bagh, Lahore) It was a private enterprise and was equipped with 5 ton Arc Furnace 6-inch Rolling Machine Machine Shop The total production of these two units was about 12,000- 13,000 ton/year. This production capacity was insignificant to India’s total production which was 1.25 million ton/year in 1947. Other than these two plants there were some small steel industries in the following cities of West Pakistan : - Sialkot - Gujranwala - Duska - Wazirabad Whereas there was no significant steel industry in East Pakistan, worth mentioning. The steel industries at that 1

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Page 1: Development of Steel Industry of Pakistan

Development of Iron and Steel Industry of Pakistan

United Kingdom in their colonial rule in India developed a strong base of steel industry in the subcontinent. The main purpose was to develop a large network of railways so that Britain can easily transport trade goods within India and bring those goods to sea ports from where they would be taken to Europe.

Early Years of PakistanAfter the partition of Subcontinent in 1947, India had 3 steel producing plants

whereas Pakistan’s share of Iron and steel industry was 2 producing units.i. North-Western Railway (Mughalpura, Lahore)

It was operated by government and it contained 3 ton Arc Furnace 18th century Bridge Crain to move ladles

ii. Mukand Iron and Steel Works (Badami Bagh, Lahore)It was a private enterprise and was equipped with 5 ton Arc Furnace 6-inch Rolling Machine Machine Shop

The total production of these two units was about 12,000-13,000 ton/year. This production capacity was insignificant to India’s total production which was 1.25 million ton/year in 1947. Other than these two plants there were some small steel industries in the following cities of West Pakistan :

- Sialkot - Gujranwala- Duska - Wazirabad

Whereas there was no significant steel industry in East Pakistan, worth mentioning. The steel industries at that time were majorly catering needs of agricultural sector. A large portion of iron and steel was consumed in making knives and cutting tools for farmers.

Determining the Iron and Steel Policy The importance of iron industry in a country’s economic development and

growth is unique and unavoidable. Pakistan government introducing its first industrial policy reserved 27 industries including Iron and Steel industry for control by the centre. Development of Industries (Federal Control) act was enacted in 1949 and Steel Industry came under official control of center.

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Initial Surveys In 1949 Malik Ghulam Muhammad, the then minister of Pakistan for Finance and Economics Affairs invited United State Steel Export Company to recommend the government of Pakistan to the most effective method of obtaining the kind and quality steels for Pakistan’s economy. The U.S. mission consisted of 17 experts. In 1950 the mission submitted a detailed recommendation of plants to be installed.

By the end of 1951 Pakistan Industrial Development Commission (PIDC) contracted Demag of Duisberg, Germany, to undertake the investigation of iron ore in Chitral and other parts of Pakistan. The result were encouraging, as they proved that setting an integrated iron and steel plant in Pakistan was feasible. Another area of high concentration ore was discovered, Kalabagh and its surrounding area had good reserves of 18,000,000 tons of iron ores.

Government of Pakistan began construction of Foundry in Wah at 1954 and around the same time Karachi Shipyard Foundry was finalized and execution began in 1956.

Iron ores reservoirs in ChicaliIn 1955, Messrs. Krupp and PIDC submitted a proposal involving installation of a plant at Piran Ghaib near Multan. The plant was supposed to produce 50,000 to 70,000 tons of billets using Chicali Iron Ore by employing Krupp-Renn process and electric arc furnaces. The proposal was rejected on the grounds that Krupp-Renn process was not industrially sound and feasible and also that the scheme was not economically viable.

World Bank ReportIn early 1959, services of Mr. C. L. Austin of the World Bank were acquired by the government of Pakistan to advice on the future course of action for the establishment of the iron and steel industry of Pakistan. Based on Mr. Austin’s recommendation the Central Cabinet decided that:

i. further exploratory work should be carried out to prove feasibility of Chicali ore by in depth analysis of as many samples possible

ii. the project should be handled by Bureau of Mineral Resources on a priority basis.

iii. PIDC should continue its prospecting operations for iron ores in the Chicali area.

In compliance of Central Cabinet decision, Bureau of Mineral Resource in 1959 assigned investigation to Messrs. Kellog of USA who in turn proved that Chicali iron ore is not suitable for Direct Reduction process of Iron extraction. It was also later on proved that Chicali ore was not suitable for Krupp-Renn process.

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However, wheels of industries turned on with positive result. The Sheer will of the people through Arc Furnaces built up steel production capacities to 63,600 tons per year till 1960.

Table 1 - Steel consumption in 1960

Public Sector Consumption(tons/year)I Pakistan Western Railway, Lahore 15,000Ii Pakistan Ordinance Factory, Wah Cantt 10,500iii Karachi Shipyard & Engineering Works 5,400 Private Sector Consumption(tons/year)I BECO Industries, Lahore 15,000Ii Karimi Industries, Nowshera 4,500iii Sartaj Industries Ltd. , Lahore 3,600Iv Steel Casting, Gujranwala 3,000

Steel Mill in East PakistanIn 1962 PIDC was bifurcated and East Pakistan Industrial Development Commission (EPDIC) planned a steel mill based on imported pig iron and scarp. It went into production in 1969 with a moderate target of 75,000 tons/year which was doubled to 150,000 tons/year in 1970 and ultimately by expansion to a production capacity of 250,000 tons/year. Unfortunately due to disturbance of 1971, which resulted in separation of East Pakistan as a separate country Bangladesh, the plant was brought to a stand still.

War with India in 1965 resulted with raw material shortage for rolling mills.A scheme prepared by WPIDC in 1966, on alloy steel production passed on to the private sector.

Kalabagh Steel Mill ProjectAs a result of Russian Premier Kosygin’s visit to Pakistan in April 1968, the government decided to offer Kalabagh Steel Mill Project to the Russians for consideration. An agreement was signed between the WPIDC and Messrs.Tiajpromexport of Moscow in May 1968 for the preparation and submission of an economic and technical report on the Kalabagh steel mill project.

The Russian experts submitted their feasibility report on the Kalabagh Project on 17th May, 1969. Whilst disagreeing with the technical and economic aspects as presented by the Slazgitter group earlier, the Russians considered that Kalabagh project based on the use 100% Chicali ore would suffer from extremely high capital costs and unfavorable operating economics.

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Planning for Pakistan Steel Mills

In 1960 a contract was signed between by the government of Pakistan and U.N. Pak Mineral Survey Committee for mineral investigation in Pakistan and it was proved by Geological Surveys that reserves of iron ore and other raw materials required for iron making existed amply and the following deposits were confirmed later in 1961-63 by the United Nation Special Aid Fund:

i. Iron Ore- 250 million ton in Chucali pass- 150 million in Kutch, Ghulgan and Makerwal mines

ii. 200 million tons of high grade limestoneiii. 900 million tons of dolomiteiv. Ample reserves of High-Quality fireclayv. Molding sand

Abundant supplies of water for cooling and industrial use were available from Indus River and Arabian Sea.

In view of the above United Nation Special Aid Fund arranged a pilot plant trial on 1,500 tons of Chicali iron ore at Ougree near Liege in Belgium in November 1964 and found that iron could be successfully extracted by employing acid blast furnace process. This was further confirmed by a full-scale industrial test on 15,000 tons Chicali Iron ore at Salzgitter, West Germany in 1966, which according to the international experts was a complete success.

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Building of Blast Furnace

In July, 1968 Pakistan Steel Mills Corporation was setup as a private limited company in the public sector in accordance to the Companies Act of 1913, with the objective to establish and run steel mills at Karachi and other places in Pakistan.

The foundation stone for this gigantic project was laid on the 30th of December, 1973 by the then Prime Minister Mr. Zulfiqar Ali Bhutto. The mammoth construction and erection work of the integrated steel mill, never experienced before in the country, was carried out by a consortium of Pakistani construction companies under the supervision of Soviet experts.

Pakistan Steel did not only have to construct the main production units but a host of infrastructure facilities involving unprecedented volumes of work and expertise. Component units of the steel mill numbering over twenty and each a big enough factory in its own right were commissioned as they were completed between April, 1981 to August, 1985 with the Coke Ovens and By Products Plant coming online first and the Galvanizing Unit last. Commissioning of Blast Furnace Number 1 on the 14th of August, 1981 marked Pakistan's entry into the elite club of iron and steel producing nations. The project was completed at a capital cost of Rs. 24,700 million. The completion of the steel mill was formally launched by General Zia-Ul-Haq the then President of Pakistan on the 15th of January 1985.

The Infamous Scandal of Pakistan Steel Mill’s Privatization

In May 2006[2], the government of General Musharraf privatized Pakistan Steel Mills. Ict process. The verdict was delivered on 8 August 2006.[2]

The Supreme Court on 8 August 2006 held that the entire disinvestment process of the Pakistan Steel Mills reflected a haste, ignoring profitability aspect and assets of the mills by the financial adviser before its evaluation. The transaction was the outcome of a process reflecting procedural irregularities, said the 80-page judgment in the PSM case.On 23 June, a nine-member bench of the Supreme Court had annulled the sale of the country’s largest industrial unit to a three-party consortium and had directed the

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government to refer the matter to the Council of Common Interests within six weeks. It had declared the $362 million transaction with the Russian-Saudi-Pakistan investors as null and void.

Verdict of Supreme CourtAuthored by Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, the judgement said the entire exercise reflected a haste by the Privatisation Commission (PC) and the Cabinet Committee on Privatisation (CCOP). The PC had processed the 30 March final report of the financial adviser the same day and a meeting of the PC board and a summary had also been prepared the same day when a six week time was mandatory to examine and fix a fair reference price for approval by the CCOP.“This unexplained haste casts reasonable doubt on the transparency of the whole exercise and reflects CCOP’s disregard towards mandatory rules and materials, essential for arriving at a fair reference price,” it maintained.The board had proposed to value the share of the mill at Rs17.43 but it was reduced to Rs16.18 without assigning any reason, the verdict said. The verdict said that keeping in view the annual net profit of the mill, its shares’ value should have been ascertained by offering 10 per cent equity of the mills on the stock exchange.“A constitutional court would be failing in its duty if it does not interfere to rectify the wrong, more so when valuable assets of the nation are at stake,” the judgment said.

Present condition of Pakistan Steel IndustryToday Pakistan Steel mills is producing about 1 million ton per year steel where private sector is producing 30 million (including billet, bars, channel and angle etc.) Pakistan Steel Mills are, however, meeting only 25% of the country's demands. The rest is being met through imports and ship breaking. The production is seriously hindered by ill planning, corruption and mismanagement. The mill has two blast furnaces that are not working at their optimum capacity. BF I is reportedly deteriorating as its outer lining has been burnt and BF II, which was recently repaired at a cost of Rs.700 million, cannot be run at its full capacity because fine quality pig iron is not available.

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History of Iron and Steel Industry of Iran

Initializing Ironmaking in Irann 1927, plans were drawn up to establish smelting works in the north of the country to produce rail tracks domestically. This action was in connection with the go-ahead given by the parliament to start the construction of a railway between Koor Musa and Mohammara. Out of the railway budget, 4.5 million tomans were earmarked for this purpose, and a German expert was engaged to make a feasibility study. Suitable iron had been found near Semnan, but no coal. The works would be dependent on the emæak coalmine, which was about 100 miles away, so a special railway would have to be built between the mine and the works; moreover, it was feared that the ore deposits at Semnan would be exhausted in fifteen years if the works were to operate at full capacity. As a result, the project fell through at the end of 1928. In early 1928 bids had actually been invited, despite the fact that the feasibility study had estimated the costs to be twice the amount which the Majles had allotted, while the German Krupp Corporation, one of the world’s principal steelmakers and arms manufacturers until the end of World War II, even estimated the costs to be much higher.

Agreement with Germany for Blast FurnacesAlthough the government shelved the project for the moment, it did not forget about it. In 1938, an agreement was reached, after much study and preparation, between Iran and a German consortium (Demag-Krupp) for the construction of two blast furnaces with a daily production of 150 tons, a steel factory, a rolling mill, a wire-drawing mill, a foundry, a wrought ironworks, a coke crusher, a power plant, and some ancillary industries such as a lime plant, an ammonia and benzol plant, and a tar distillation plant. The works were to be completed in three and a half years time and would employ 1,200 workers when working at full capacity. The original site was planned to be south of Tehran near the cement works, but Karaj was chosen instead, because of its more suitable water supply. A disadvantage, however, was that coal supplies for the power plant and the blast furnaces had to be transported from ˆemæak and Zirab at about 35 miles distance. In 1939, Reza Shah laid the first foundation stone, and, although work proceeded as planned, the works were still unfinished in 1941 when the Allies invaded Iran. This event meant, of course, that the whole project was jeopardized, for all relations with Germany (q.v.) were cut, which led to the demise of the project. Part of the machinery was still at sea when World War II broke out and was seized by the Allies, and the rest remained in Germany and rusted away. The partly completed buildings at Karaj became dilapidated (Floor, 1984; Koellner). There were also a small number of traditional iron foundries and blast furnaces in Mazandaran, and the erection of a new plant in that area to smelt 300 tons of iron per day was being considered (Gupta, p. 75; Elwell-Sutton, p. 104).

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Collaboration with SwedenAfter World War II, the government wanted to complete the Karaj factory (subject to availability of coal) to manufacture rails, sleepers, iron beams and sheets. However, the Overseas Consultants’ report advised against it . Since then, “more has been said and less done about a steel industry than any other industry in Iran” . For the government persisted in its desire to have a steel mill and hired a continuous flow of 25 different groups of consultants, who all came to the same conclusion that the steel mill was not viable. Although the Krupp Corporation agreed in 1952 to renew its contract to build the mill, the World Bank (International Bank for Reconstruction and Development, IBRD) refused to finance the project in 1959. In 1961, a proposal prepared by the London-based Kaiser Engineers Corporation for a rolling mill at Karaj, as the first phase of an integrated steel mill, also was unable to obtain IBRD financing. The project then was shelved, although funds had been allocated in the Third Development Plan. A project for a private foundry in Khuzestan to process imported scrap (35,000 tons per year) was approved. The project was only realized in 1963, when an agreement was reached between a private Iranian and a Swedish company to build the scrap metal steel mill. Meanwhile, the army’s munitions factories acquired a five-ton foundry and the Iranian State Railways a 10-ton per day electric arc foundry. Mainsazi-ye Iran, a private company, built a cast-iron foundry in 1960 at Ahvaz (q.v.) with an annual capacity of 6,000 tons. It produced mainly cast-iron pipes (Echo of Iran, 1963, pp. 277, 297; 1965, p. 239).

Contract with RussiaThe basis for future steel production in Iran was laid by the signing of a contract with the USSR in 1965 to finance and erect a steel plant in Isfahan (National Iranian Steel Company, NISC). Repayment of the loan was done through deliveries of natural gas from Iran to the USSR. The state-owned plant consisted of four production units using blast furnace processing technology with a production capacity of 550,000 tons per year. The Isfahan steel plant (Aryamehr Steel Mill, later called Doawb-ahan-e Esafahan) was commissioned, and its cast iron department came into operation in 1971. At that time, a contract for the expansion of the Isfahan steel plant to a capacity of 1.9 million tons per year of structural steel was signed with the USSR. Work started in 1973, but due to political and economic upheaval the plant was not completed until 1983. The private-sector Iran National Steel Industries Group (INSIG, Goruh-e Melli-ye Sanati-ye Fulad-e Iran) erected a second 85,000 tons per year rolling mill (Sahin), also at Ahvaz, in 1969, and ordered a third one (Sahyar, 120,000 tons per year) to produce structural steel by rolling imported, semi-finished steel products. Later the two plants were referred to as Navard Iran. INSIG also constructed a steelmaking shop (using an electric arc furnace [EAF] and continuous casting [CC] technology) to produce semis by melting steel scrap. Two other bloom plants for processing sponge iron (400,000 tons capacity) were erected in 1972 by the Sahriyar Industrial Group; they were nationalized after the Islamic revolution and are now managed by the National Iranian Steel Industries Company (NISCO). The Ahvaz complex supplies these two plants. Also built were the

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Ahvaz Rolling and Pipe Mills Company to produce 140,000 tons of skelp (steel shaped for pipe-making) per year and the Sahriyar Pipe Manufacturing Company to produce 80,000 tons per year of seamless and galvanized pipes (0.5-5 inches diameter), both in 1973.

Switching to DRI TechnologyThe problems encountered at the Isfahan steel plant and the private sector furnaces (shortage of scrap and quality coking coal) constrained the government’s policy to expand the country’s iron and steel industry to respond to growing domestic demand. The development of new methods of direct reduction processing technology provided a viable alternative for the government, given the fact that Iran had rich resources of natural gas and various required raw materials, in particular, iron ore. The resulted in the establishment of another state-owned company under the name of NISCO in the mid-1970s to produce iron and steel products by utilizing the direct reduction process, as well as to mobilize the relevant iron ore mines. To accomplish this, two contracts were signed between NISCO and a European-American consortium to construct two integrated steel mills in Bandar-e Abbas (q.v.) and Ahvaz and a heavy rolling mill in Ahvaz.

Role of National Iranian Steel Company(NISCO)After the Islamic Revolution in 1979, fundamental changes took place in the Iranian Steel Industry Organization. The two state-owned companies were merged, and NISCO was affiliated to the former Ministry of Mines and Metals, and the Ministry of Industries and Mines was established. NISCO now directs and supervises the Iranian steel industry from the exploration stage of its relevant raw materials up to the marketing of its products in domestic and international markets. As the largest state-owned steel company in the Middle East, NISCO ranked 26 in the table of the world’s major steel producing companies in 1999 and 2000. NISCO is also a regular member of the International Iron & Steel Institute.

Building of Ahvaz Steel ComplexDuring the Iran-Iraq war (1980-88) the steel industry development lost its impetus to some extent. Construction of the Ahvaz Steel Complex (Mojtame-e Fulad-e Ahvaz) had been started in 1974 with a planned capacity of 2.35 million tons per year. Completion was scheduled for 1983, but was delayed by damage due to Iraqi air raids, and the plant cost 40 percent more than originally estimated. However, immediately after the cease-fire and implementation of the First and Second Five-Year Development Plans of the country, the steel industry achieved a considerable growth. In 1988, the volume of steel production did not exceed an annual one million tons. However, it reached 6.3 million tons in 1999 and 6.6 million tons in 2000. This was due to the completion of old projects and the implementation of new ones. Of the old projects the most notable was the Ahvaz Steel Complex, which is built 12 km from Ahvaz on a terrain of 300 ha. The first of the plants was ready for operation in 1989 with a capacity of 55,000 tons per year. Its

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150 x 150 mm steel ingots are supplied to NISC, which transforms them into beams and round bars.

Improvement in Capacity of Ahvaz Steel ComplexThe second and third phases (two furnaces and a casting unit) of the Ahvaz Steel Complex were completed by 1989 and 1990, respectively, with a production capacity of 1.6 million tons per year; this output is converted into sheets by the Kavian heavy rolling project , which is part of the Ahvaz steel complex. Work had started on the Kavian plant in 1976, and it was completed (with delays) in 1989. Its output consists of 400,000 8-40 mm sheets and 300,000 tons of slabs, while it also converts slabs into billets and blooms using the hot rolling method. At Ahvaz there is also the Nasr Steel Mill (Fulad-e Nasar), which produced 125,000 tons of steel billets in 1988. Its design capacity is 360,000 tons. The Khuzestan Steel Production Complex produced 1,698,000 tons of steel in 2002-03, hitting a record in its annual production. The complex was to produce almost two million tons of steel in 2003-04. Khuzestan Steel Co. (KSC) actually consists of three companies (Ahvaz Steel Complex, INSIG, and Kavian), but in early 1994 NISCO, the mother company, decided to integrate them into one company to better compete in the world market. Further upgrades and expansion also took place at the Isfahan Steel Mill in 1989 when the Italians completed two continuous casting units.

Iran Alloy steel plant

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One of the first new projects was the construction of the Iran Alloy Steel Plant (Fuladha-ye Alyaji-ye Iran) at Yazd, which started in 1988 and became operational in 1998. It has a production capacity of 120,000 tons of alloy steel sections and 20,000 tons of alloy steel ingots. The capacity may be raised to 200,000 tons later.

Mobarakeh Steel ComplexAnother new project was the Mobarakeh Steel Complex (Mojtame-e Fulad-e Mobaraka), which is the biggest industrial project in Iran. It has been built by an Italian consortium and is located on 35 sq. km of land and has 28 associated plants as well as a number of non-associated ones. Originally it was planned to be built at Bandar-e Abbas, but it was decided to build 75 km to the southwest of Isfahan to be closer to the Uadormalu coal mines, which added much to the cost of its final products. The Mobarakeh Steel Company is affiliated to NISCO and is also the first integrated flat steel production plant in the Islamic Republic of Iran based on DRI ["direct reduced iron" oxidation]-EAF-CC technology. The plant became operational in late 1992 with a projected production capacity of 2,935 million tons of liquid steel per year. The current capacity is estimated at 2.8 million tons per year. Expansion of the plant to an annual capacity of 4.1 million tons is under way. The expansion contract was signed between Iran and three Italian companies on a buy-back basis.

INSIG - Iran National Steel Industrial GroupINSIG (as noted above, part of KSC) also initiated the construction of new capacity such as a bar rolling mill financed by the Italian steel corporation Danieli with a capacity of 550,000 tons of bars on a yearly basis. It also intends to reconstruct its casting and melting shops to increase production to 470,000 tons of crude steel when financing has been secured. INSIG is situated on the Ahvaz-Korramæahr road and was nationalized after the revolution. It has seven plants in five sections, including three rolling mills, the first of which started operating in 1967. The INSIG group produces knurled and plain bars, drawn wires, iron beams, angle irons and belt in section 2. Steel and steel girders are made in section 3, while section 4 has two galvanized and non-galvanized pipe-making units (70,000 and 120,000 tons capacity, respectively).

Capacity of Isfahan Steel plantThe Isfahan Steel plant will add new capacity to produce some 3.6 million tons of crude steel. The Saba Steel Complex, near Isfahan, which has been designed and constructed by Isfahan Steel Mill, adds a total of 700,000 tons of steel sheets to the country’s annual production. The Khorasan Steel Complex in Nishapur (51 percent privately owned, 49 percent Isfahan Steel) with an annual capacity is 550,000 tons became operational in 2002. Its capacity will be increased with a sponge iron plant and capacity will be increased to 1.3 million tons. The Meybod Steel Project has a capacity of 300,000 of cast iron per year. The Zagros Steel Project in Kurdistan province has a capacity of 70,000

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tons of cast iron per year. It is planned to add an agglomeration plant later. The Hormozegan Steel Project has a planned capacity of 1.5 million tons of crude steel. Hormozgan Steel Complex signed two contracts in January 2003. A contract worth USD 300-400 million, for the construction of a 1.5 million-tons-per-year slab and lime calcining plant, was signed with a consortium of Germany’s SMS Demag AG, Iran International Engineering Company (IRITEC) and its subsidiary registered in Italy, Irasco. The estimated USD 140 million contract for the setting up of a 1.65-million-tons-per-year direct reduction iron facility was signed by Germany-registered Mines & Metals Engineering GmbH (MME). NISCO will be the operator of the plant. Financing will be arranged on a buy-back basis, with a structure similar to the one used for the expansion of the Mobarakeh Steel Complex. The buy-back agreement will cover both the project’s international and local content.

Bandar-e Abbas Jetty projectTo sustain the expansion plans of the steel industry (in particular at Isfahan Steel and Mobarakeh Steel), the ongoing Bandar-e Abbas Jetty project will enable the handling of 5 million tons per year of minerals at the port, allowing the docking of ships with a capacity up to 150,000 tons. Likewise the Bandar Imam Jetty project enables the handling of 5 million tons per year of iron ore at the Khuzestan Steel Complex. Ships with a capacity of 60,000 tons can dock of the jetty, while further dredging will allow docking of ships of 100,000 tons. Not only port access and capacity are important for Iran’s steel industry, but also the railway system. According to the Ministry of Industries and Mines, 50 per cent of total railway capacity was allocated to transporting the output of the National Steel Company in 2000, and with planned increase of steel production capacity more demand will be made on rail capacity.

Present Condition of Iran Steel IndustryWorld steel production in 2000World steel production in 2000 reached 850 million tons, of which Iran’s share was 6.7 million tons; Iran then ranked twenty-third among steel-producing countries, and twenty-first in 2004. NISCO reported that the annual production of steel in Iran for 1382 (2003/04) was estimated at 8.13 million tons—the first time that Iran’s steel production would surpass eight million tons. This meant that Iran was able to satisfy 70 percent of domestic demand, while at the same time exporting some 1.5 million tons of steel. Exports constitute a small part of the output of the steel and other metal industries. Only ingots and some aluminum was exported and amounted to less than 1 percent of total exports in 1999. As to imports, except for universals, plates, and sheets (UN International Trade Centre, no. 674), tubes, pipes and fittings (678), and bars, rods, shapes, sections (673) all imports were less than 1 percent of total imports. The location of the Mobarakeh plant at Isfahan rather than near Bandar-e Abbas constrains its export capacity due to high transportation cost. Investments are ongoing to expand the capacity up to 14.7 and later to 18.4 million tons per year. NISCO has also taken steps

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toward upgrading the quality of its products and improving the management system with due consideration to environmental protection and better working conditions.

Production in 2002-2003Iran was scheduled to produce some 8.1 million tons of steel and 7.6 million tons of steel slabs in 2003. In 2002, about 7.5 million tons of steel, as well as 7.5 tons of steel slabs were produced in the country, so the country is capable of producing steel and steel slabs in equal amounts. However, the domestic consumption of steel was as high as 11 million tons in 2002, which meant that more than 3.5 million tons of steel were imported. The domestic consumption of steel for 2003 was predicted to be some 12 million tons, which is likely to increase with a boom in the construction sector. This is because, unlike many countries in the world which use concrete and bars, Iran uses iron slates in construction, which also adds to the instability of its buildings. Despite all, Iran managed to export 1.5 million tons of steel products in 2002. Iran’s steel is capable of competing with European products due to its quality and price. The only issue obstructing its path to more exports is domestic demand that outweighs production.

Future of Iranian Iron and Steel IndustryThe prospects of Iran’s steel industry seem favorable due to its large and rich raw material resource base, its rich and cheap energy resources, human capital and technical know-how. Iran not only added new capacity during the last 20 years that significantly reduced the country’s import bill and even made export of steel products possible, but it also developed its own technological capacity. Iran, for example, developed its own direct reactivation method of producing iron with 96 percent “metallization,” which works more effectively than the three other conventional methods. The method has been patented and licensed to an Italian company. The Isfahan Steel complex also has been developing innovative techniques of producing spongy iron, manufacturing macro-weighty crafts, etc. Takado Company was established as an investment company and was an affiliate of Isfahan Steel. It started operating with personnel from Isfahan Steel, and after a decade it became one of the largest investment companies in the steel industry. It consists now of 13 companies and has 25 affiliated companies, and it is involved in most aspect of the steel industry

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Conclusion

Pakistan entered world’s steel making arena with a humble beginning. There was gradual development in steel industry till 1970s. Pakistan Steel Mill can safely be called a milestone in Pakistan’s history. However, the present production of Pakistan Steel and it’s infamous privatization scandal indicate the weak operation of Pakistan’s biggest industrial complex. This is because Pakistan’s steel non-professional administration which came to power due to curse of nepotism and corruption.To improve the condition of Pakistan Steel

Research and Development department should be made strong Expert technocrates should be brought to authority and key positions Eliminate nepotism and politics in administration

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References

1. “Development of Steel Industry in Pakistan” by Fida Rahim , Pakistan Engineering Congress, published in 1972 http://pecongress.org.pk/images/upload/books/P110.pdf

2. History of Pakistan Steel from the official Website, http://www.paksteel.com.pk/organ_our_history.html

3. http://www.dawn.com/weekly/dmag/archive/060521/dmag1.htm4. http://www.dawn.com/2006/08/09/top4.htm5. .http://www.metalsnews.ir/en/index.php?option=com_frontpage&Itemid=1

6. http://www.iranica.encyclopedia.com

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