Reviving an ignored asset

Published September 4, 2023
National Steel Complex Limited, Karachi.—NSCL
National Steel Complex Limited, Karachi.—NSCL

Exhausted by the relentless economic pressures, as public frustration seeps onto the streets, the depreciating rupee grapples to salvage its value, markets descend into chaos, and political turmoil persists amidst legal entanglements, it’s astonishing to find investors placing their bets on the untapped potential of Pakistan.

The US-based Ciena Group, which acquired Tuwairqi Steel Mills Limited (TSML) in April 2022, renaming it National Steel Complex Limited (NSCL), has commenced backward integration by securing iron ore mining leasing rights in Pakistan. NSCL’s subsidiary, Alhadeed Paletisation Company, has entered sub-lease agreements with multiple private leaseholders in iron ore-rich areas in Balochistan, specifically Mashkichah in Nokundi district. These sites collectively cover about 6000 acres.

The company has outlined a strategy for mechanised mining and dry beneficiation at the mining sites. Additionally, they have planned to establish a wet beneficiation and palletisation plant on NSCL-owned land in Port Qasim.

Regarding the prospects of initiating NSCL operations, the high-ranking officials of the caretaker government, who are still in the adjustment phase, expressed optimism.

The National Steel Complex Limited, initially given the go-ahead for operations in 2013, is finally poised for revival

During a phone conversation, Gohar Ejaz, the caretaker federal minister for industries, a self-proclaimed third-generation businessman, admitted that he hadn’t been fully briefed on the project yet but assured that all issues hindering progress could be resolved.

He stated, “We consider all dormant units as valuable assets going to waste. We plan to meticulously address each case separately and make every effort to re-establish their operations.”

He alerted the private sector: “The era of leaning on the government too much has come to an end, and the private sector should keep expectations realistic. My goal is to triple the country’s exports to $80 billion within the next five years.” He said it’s doable through “waste reduction, promoting business modernisation and restructuring and attracting fresh investment”.

Jameel Qureshi, Secretary of the Special Investment Facilitation Council (SIFC), also responded as the project falls in its ambit. All details of the project were not at the top of his mind as he said he has been overloaded with work in his current assignment. He gave a generalised response to queries in this regard.

“Dedicated to its mission of driving rapid developmental strides in Pakistan through substantial increases in investments, the apex economic body, SIFC, holds investor value in high regard and stands prepared to aid them in circumventing avoidable delays and eliminating all obstacles along the way,” Mr Qureshi said.

Zaigham Adil Rizvi, CEO of NSCL, hopes for an early revival of a project that he said promises immense benefits for the country.

Elaborating on the basis of his trust in the country and its future despite past setbacks to the said steel plant, he said, “We as Pakistanis have a firm belief that one day Pakistan has to prosper. With a profound faith in Allah, my team stood steadfast in turbulent times after the plant shut down. With their support, we were able to keep this plant in a fit-to-run condition, as evidenced by the technical audit done by the original equipment manufacturer Midrex of USA and direct reduced iron (DRI) experts recently.

“With more than 10 years of relentless effort, we are confident that this project will move ahead and will eventually become Pakistan’s state-of-the-art and fully integrated steel complex, as was envisioned initially.”

To put things in perspective, it is relevant to recall the history of this mega project. Tuwairqi Steel Mills Limited (TSML) was set up by the Al Tuwairqi Group of companies in Saudi Arabia. After completion in 2013, it cleared the test run, but the project couldn’t start commercial operations because the sponsors and the government were unable to strike the crucial gas supply deal.

During former prime minister Imran Khan’s government, a term sheet to buy TMSL was signed with Ciena Group of the US in October 2019. The process was completed in April 2022 when the management rights were transferred to the new owners.

The exact volume of payment to Saudi owners Al Tuwairqi Group was not disclosed, but Ciena settled an upfront $150 million loan from an Islamic Corporation for Development-led consortium. The $76m National Bank loan is said to be in the process of restructuring currently.

A reliable source connected to the Ciena Group disclosed that the group is owned by a Pakistani expatriate residing in the US, who also serves as the chairman of NSCL. Over time, the group has made investments in multiple sectors, yet it does not hold a majority stake or wield management control in any other company in Pakistan except for NSCL.

Furthermore, it was shared that the group, in collaboration with its associate company Silver Lake Inc., is actively engaged in a substantial $200m backward integration project under the NSCL umbrella. This initiative will be overseen by its subsidiary, Alhadeed Palletisation Company Limited (APCL), which is wholly owned by Silver Lake and will be responsible for managing the mining project.

The Ciena group, in a company document, highlighted its commitment to revive the giant DRI steel plant with a 1.2 metric tonnes per year (MTPY) capacity extendable to 1.5 MTPY. The plant that cleared a cent per cent capacity trial run in 2013 has since been waiting for the green signal to start steel production.

Luckily, all through the past 10 years, a small core team led by Zaigham Adil Rizvi managed preventive maintenance/cold commissioning as per standard operating procedures to keep the plant in fit-to-run condition.

The plant cleared the technical audit by Midrex, the original equipment manufacturer, in 2018 and a team of Iranian DRI experts in 2022. According to information shared by the company, the Ciena Group has already invested $350 million and intends to pour in whatever it takes to ensure complete backwards and forward integration through cutting-edge German technology.

Published in Dawn, The Business and Finance Weekly, September 4th, 2023

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