KARACHI: Pakistan Steel Mills (PSM) is targeting 2012 to complete the process of being completely reliant on locally produced iron ore. To that end, it is now collecting iron ore from Balochistan, which will not only be cost-effective but will also provide employment to the local population. This was said by Imtiaz Lodhi, acting CEO of PSM, during a press conference on Tuesday.
The PSM administration has also revisited contracts of raw material imports and aims to increase regional trade with Iran and India instead of depending on far flung countries like Australia. The man in charge added that PSM is also in talks with an Iranian firm to execute a barter trade agreement through which the organisation can export its by-product coke and import iron ore in return.
Local iron ore has more iron content, in the range of 56 to 58 per cent, compared with 50 per cent iron content in imported iron ore. This should help PSM in producing quality steel products in the future, he added.
He also disclosed that a high-level delegation had visited Russia and Pakistan had signed a memorandum of understanding (MoU) there to help PSM expand its production capacity.
PSM has asked Transparency International to review all its current contracts in a move to increase credibility of business deals of the largest industrial unit in the country. “Corruption in PSM cannot be eliminated with a magic wand,” he stressed.
In response to a question, Lodhi said that Finance Minister Dr Abdul Hafeez Shaikh was of the view that PSM should undergo major changes. “We cannot privatise PSM at this point in time. First we want to make it profitable entity and only then can we get the right price,” he said.
Under the Balochistan package, the government has withdrawn taxes from the Gadani ship-breaking yard, which is PSM’s direct competitor in the local market, said Lodhi. However, PSM is still paying a 17 per cent sales tax on the purchase of raw materials, he explained, adding that PSM is negotiating with the Federal Board of Revenue (FBR) over the issue.
Lodhi concluded that the process of hiring a new CEO will be completely transparent.
“Advertisements will be given in newspapers so the presence of merit can be ensured in this strategically important national asset at all levels in the organisation,” he said.
PSM suffered accumulated losses of Rs26 billion during the fiscal year 2008-09 when steel prices in the international market collapsed from $1,250 per ton to $350 per ton. In fiscal year 2009-10, PSM again faced losses of Rs13 billion. After this, the organisation’s administration says the company is being run on the Chinese model instead of the 20-year-old Japanese model in which companies finalise deals at the start of the year.
Published in The Express Tribune, October 6th, 2010.