Tuwairqi Steel gets $20m from IDB affiliate

TSML is a subsidiary of Al Tuwairqi Holding and is Pak’s first private sector integrated steel manufacturing project.

KARACHI: Tuwairqi Steel Mills Limited (TSML) will be getting $20 million for its almost complete direct reduction plant from an affiliate of the Islamic Development Bank (IDB).

TSML is a subsidiary of Saudi Arabia’s largest private sector steel producer Al Tuwairqi Holding and is Pakistan’s first private sector integrated steel manufacturing project. The company secured this Shariah-compliant financing for its $245 million plant, working capital excluded, from the Islamic Corporation for the Development of Private Sector (ICD).

“Ninety five per cent of the construction work is complete,” says the Director Operations TSML, Zaigham Adil Rizvi. He told The Express Tribune that the current financing would help the company in commercial production.

“After securing the much-needed financing from ICD, we want to rush towards commercial production by the fourth quarter of 2010,” he said.

According to the term sheet, ICD will provide $20 million to TSML for completing its 1.28 million tons per year Direct Reduction Plant, located at Bin Qasim, Karachi. The term sheet for Shariah-compliant financing was signed by Zaigham Adil Rizvi, Director (Projects) TSML and Ibrahim Ali, Director ICD, recently at ICD head office located in Jeddah. “The financing from ICD is going to help expedite completion of this pivotal project in Pakistan,” said Rizvi. The project comes at a juncture when Pakistan’s steel industry is suffering and is looking for increasing production to bridge the gap between demand and supply.

Projects financed by the ICD are selected on the basis of their contribution to economic development considering factors such as creation of employment opportunities, growth potential, etc. “We have not only met the criteria successfully but also have received recognition for bringing in cutting-edge technology to Pakistan.”

Rizvi said that Pakistan has one of the lowest per capita steel consumption in the world, adding steel demand in the country was so high that two or three steel mills, with capacities similar to their plant, would not be able to meet the required demand.

The annual demand for steel in Pakistan stands at approximately 8.4 million tons, while the current steel production is about 4.9 million tons. Rest of the steel demand is met from imports or from recycled steel coming from ship-breaking industry.

TSML complex is spread over an area of 220 acres at Bin Qasim, Karachi, and employs the world’s most advanced DRI (Direct Reduction of Iron) technology based on the Midrex process, owned by Kobe Steel of Japan. In the first phase, a 1.28-million-ton per year DRI plant is now on the verge of completion.

The mandate of ICD is to support economic development of its member countries through provision of finance to private sector projects in accordance with the principles of Shariah.

Published in The Express Tribune, August 21^st, 2010.