KARACHI: The board of Tuwairqi Steel Mills Limited (TSML) has decided to proceed with its earlier decision taken by the shareholders through a resolution to lay off 1,000 employees.
The board meeting, which was held on Jan 27 in Dammam, noted that the pending matter of the feedstock tariff of natural gas for the DRI plant of TSML had not yet been resolved by the government.
In the extraordinary general meeting (EOGM) of TSML shareholders, held on Nov 25 and 26, 2014, in Islamabad, a resolution was passed that if next ECC meeting fails to address the pending issue, Al-Tuwairqi and POSCO would exit from Pakistan.
The board members observed that after the EOGM many ECC meetings were held but the matter of TSML on the basis of third summary sent to the Cabinet Division by the Ministry of Industries could not come on the agenda thus establishing that the matter was not on priority list of the GoP.
The DRI plant has been in shutdown mode since September 2013 for commercial reasons.
TSML is a joint venture of POSCO of South Korea and Al-Tuwairqi Group of Saudi Arabia. The investment on the ongoing operation of the DRI plant is to the tune of $340 million. Another $890 million was in the offing, subject to the condition that the ongoing operation is not bleeding.
The factor responsible for the non-competitiveness of its product was the non-application of feedstock tariff of natural gas, assured initially by the government in an effort to provide a level-playing field.
TSML had agreed to have this special tariff only for a period of five years. And in lieu thereof, it offered 15 per cent equity (free of payment) to the government, as preferred stock, with preferred dividend and guaranteed buy-back after 10 years, at the break-up value.
TSML, on completion of its integration, was envisioned to be the largest fully integrated steel complex in Pakistan, with a capacity of 1.5 million tonnes per annum.
Published in Dawn, January 29th, 2015