Industry advocates iron ore import from Afghanistan

Says it will reduce cost of production of steel sector

KARACHI:

Pakistan can tap iron ore reserves of Afghanistan to reduce the cost of domestic steel production, suggested Federation of Pakistan Chambers of Commerce and Industry President Mian Nasser Hyatt Maggo.

Identifying the enormous untapped potential of Afghanistan’s Hajigak mine, he urged the government to help commission a feasibility study to assess the potential of cost-effective and long-term iron ore supplies to Pakistan’s steel industry.

In a statement on Thursday, Maggo was of the view that Pakistan’s demand for steel was bound to expand rapidly given the rise in consumption of the commodity in households.

“Smooth supply of steel from Afghanistan to Pakistan can immensely benefit the latter in the coming decades,” he said. Maggo pointed out that no other country enjoyed a flexible land route to the Hajigak mine other than Pakistan as Hajigak was just 400 kilometres away from Peshawar.

Topline Securities analyst Mehroz Khan told The Express Tribune that if the untapped reserves of iron ore in Afghanistan were extracted and supplied to Pakistan, they would act as a lifeline for the country’s steel industry and prove to be fruitful for the construction sector.

Iron ore is a basic raw material used in the manufacturing of hot-rolled coils (HRC) and steel rebars after mixing it with scrap.

The analyst stressed the need for resolving the issues being faced by the steel industry, adding that the commodity super cycle and global supply chain disruptions had severely impacted the cost and operations of the steel industry in Pakistan.

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A source in the steel industry, on condition of anonymity, said that if the government provided a conducive environment for the businessmen of steel sector, it would definitely benefit the economy.

“Though not as pure as other countries, Pakistan also has a few reserves of ore that can be mixed with the imported ones and can reduce the cost of production drastically,” he said.

“For this purpose, the government should draft a policy not just for the steel industry but also for the miners to encourage domestic and foreign investment in the mining sector.”

He lamented that in Pakistan, policies were changed every six months, therefore, “it is hard to gain investor confidence”.

Karachi Iron and Steel Merchants Association President Shamoon Bakir Ali said that smooth supply of iron ore from Afghanistan to Pakistan could be ensured, but for that rigorous planning was required. JS Global analyst Arsalan Ahmed termed the possibility of imports from Afghanistan an opportunity, saying it would save the freight cost of steel producers in the northern region.

Published in The Express Tribune, February 4^th, 2022.

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