KARACHI, Jan 8: Pakistan Steel and Bolan Mining Enterprise, a joint venture organization of Balochistan government, on Wednesday signed an agreement for the supply and use of 100,000 tons of indigenous iron ore by Pakistan Steel.

The five-year agreement was signed by director commercial, Pakistan Steel, Tariq Baig, and Ghulam Ahmed, managing director, BME, on behalf of their organisations. Managing director, Pakistan Petroleum Limited (PPL), Munsif Raza, was also present.

Pakistan Steel will utilize iron ore from Dilband by blending it with imported ores to an extent of 15 per cent, chairman, Pakistan Steel, Lt-Col Afzal Khan, told a news conference on Wednesday at the PS city office.

Since its inception, Pakistan Steel has been importing around 1.8-1.9 million tons of iron ore per annum worth $50 million from various countries like Australia, India, Brazil, Canada, etc.

“We will save around 3 to 4.5 million dollars in foreign exchange after utilizing 100,000 tons of local iron ore,” he said.

He said Dilband ore would, however, cost more than the imported ore, resulting in higher cost of production, but Pakistan Steel would bear the cost by providing subsidy to it. “We will subsidize it by paying Rs350-400 per ton as the local ore will cost Rs1,300 per ton,” he added.

He said Pakistan Steel required 60-65 per cent quality contents of iron while the present contents of iron in Dilband ore ranged between 35 and 40 per cent. However, the research is going on to increase the quality of iron ore. During this time, BME will install a plant to upgrade this ore.

“Hopefully we will ink the agreement with BME when iron contents will reach over 40 per cent in indigenous ore after 15 months production from the existing quantity,” Afzal Khan said.

Before deciding to utilize Dilband ore, he said, a team of Pakistan Steel visited various iron ores bearing sites and collected different samples of 5,500 tons, which were tested at Sinter Research Laboratory of Pakistan Steel blending with imported iron in different proportions.

He said the decision to use local ore would open the door towards development of the area, providing job opportunities and paving way for infrastructure improvement, roads and means of communication.

Besides importing from various countries, he said, Pakistan Steel had brought samples of iron ore from Iran on trial basis. On successful results, the mill will import 118,000 ton of Iranian iron ore and plans to book more shipments in future.

Dilband, which is 650km away from Karachi and 190km from Quetta, has a proven reserves of 165 million tons of iron ore.

He said Pakistan was rich in mineral reserves but had failed to fully tap these natural resources.