September 01, 2006	Friday	Sha'aban 7, 1427

KARACHI, Aug 31: Desperate to show that their main stakes are in the setting up of a new steel project at an investment of $350 million rather than in the controversial privatisation of Pakistan Steel, the sponsors of Tuwairqi Steel Mills are in the process of lodging a letter of credit to import $85 million worth of equipment and machines.

“We want our steel project to be commissioned by August 14, 2008,” Zaigham Adil Rizvi, project director of Tuwairqi Steel Mills, told Dawn on Thursday. After completing all the formalities Mr Zaigham and his team of officials are waiting anxiously for a call from the bank they have lodged the letter of credit.

“The import and delivery of machines and equipment for the plant in Karachi will demonstrate our seriousness and stake in the project,” he remarked without making any direct reference to business circle gossips that the Saudi group was here to acquire Pakistan Steel with about 5,000 acres of land with excellent infrastructure facilities.

“Our initial plan was dovetailing state-of-the-art technology of the new plant with that of Pakistan Steel and to maximise the exploitation of infrastructure facilities,” Mr Zaigham made it clear, but added hastily that “now we are on our own and we are investing heavily in developing infrastructure facilities that include power generation, transmission and other facilities.”

On completion, the steel mill project in Karachi will be the ninth member of the Saudi Arabia-based Al Tuwairqi Group of companies in Dammam that now boasts of three-fold increase in annual turnover to 1,500 million Saudi riyals in 2005 from 450 million riyals in 2001. The group owns and operates six steel mills in Saudi Arab, one in the UK and one in Sharjah. The group has also acquired a steel project in Korea.

“We are exploring the

Pakistani market for our products where at present the steel market is for five million tons that is likely to increase to 7 million tons by 2010,” Mr Zaigham disclosed and pointed out that marketing of his project’s products in the local market would be with the approval of the Pakistan government and payment of duty so that it could be on a par with Pakistan Steel.

Claiming that quite a substantial civil work has been completed for the upcoming steel project on a 220-acre plot at Bin Qasim in immediate vicinity of Pakistan Steel, the project director was confident of pushing up the installation of plant and machinery at a fast speed to complete the first phase in the next 18 to 24 months at a cost of $130 million.

It is a one-million-ton capacity plant that will produce more than half a million tons of steel billets mainly used in making rebars, wire rods, heavy structures, seamless pipes and other construction materials. The production capacity of the plant will be expanded from one million tons to 1.5 million tons in the future.

The project is based on state-of-the-art technology MIDREX -- a direct reduction process which uses natural gas to convert iron ore into direct reduce iron ore (DRI). A company brochure claims that 60 per cent of the current world production is based on this DRI technology.

The Saudi group has signed an agreement with Sui Southern Gas Company for the supply of 40mmcf of gas per day that will be used as fuel as well as input. The project needs 180 megawatt electricity for which KESC and Wapda have expressed inability to do it right now. A generation station of 35 megawatt is being set up. For long-term arrangement, the project has entered into an arrangement with Wapda for installing a 70km long 220kv transmission line. Four plants of reverse osmosis are being set up to convert the underground water into usable water.

“The average production cost of Pakistan Steel is $30 a ton as against international standard of $10 a ton,” Mr Zaigham remarked while trying to explain that his project will focus on the core job -— steel making -— and will outsource all other responsibilities.

The project plans to set up two centers of technology -- one at Karachi and the other in Lahore -- where engineers in different disciplines will be given on-job training facilities to develop expertise and then they will be posted in various units of the company to acquaint them with fast changing technologies.

Mr Zaigham said project engineers were examining iron ores from Chiniot and other places for raw material consumption in the production. But the decision will be taken on the basis of analytical reports.