Hopes are rising again. The National Steel Complex Ltd (NSCL) team is confident that, following clearance from the Economic Coordination Committee (ECC), the long-idled steelmaking giant could finally become commercially operational by next year.

The tragic saga of NSCL has seen many twists with no clear wins so far. Hopes had been raised earlier, only to be dashed time and again. The massive, state-of-the-art plant, visited by this scribe some time back, located next to the similarly troubled Pakistan Steel Mills, became yet another casualty of bureaucratic inertia and the result of an environment hostile to manufacturing. It stands as a stark reminder of why investors hesitate to commit capital to industry in Pakistan, despite its abundant resources and vast market potential.

Explaining the renewed optimism, the NSCL management credited the Special Investment Facilitation Council (SIFC) for driving progress. “Since the company is committed to sourcing both iron ore and natural gas locally, it falls squarely within SIFC’s mandate, which is actively working to resolve outstanding investor issues with the government,” the company stated.

“We’re now in the advanced stages of settlement, and a green light from the ECC could set the ball rolling,” the company said. “Beyond its strategic value, the project is well-suited for a dollar-starved economy with raw material expenses in the local currency and strong potential for foreign exchange earnings through product exports. We can begin production within a year of gas allocation.”

After over a decade of cold commissioning and preventive maintenance, the NSCL team is optimistic that commercial operations may begin next year

Responding to a query on the contentious issue of gas pricing, NSCL management stated, “SIFC has already recommended a resolution. The proposed tariff, notified by Ogra [Oil and Gas Regulatory Authority], is effectively a zero-subsidy rate, linked to crude oil price. Given the government’s active participation in SIFC meetings, we believe it is aligned with this approach. It’s now a matter of completing formalities. We’re seeking gas as feedstock, not fuel, and for any fuel gas required, we’re fully prepared to pay the standard rate applicable to others.”

“In Pakistan it’s only the fertiliser industry that currently uses natural gas as feedstock. We’ll be the first in the steel sector to do so through the gas-based DRI [direct reduced iron] route for large-scale production.”

“The DRI/HBI [hot briquetted iron] route is the future of steelmaking. Not only is it environmentally friendly, but it also opens up major export potential. We have an offtake deal with Sojitz Japan for around one million tonnes of HBI annually. As a globally recognised trading powerhouse, much like Marrubini, Sojitz’s involvement positions us to generate substantial foreign exchange earnings from a single operation.”

Senator Haroon Akhtar Khan, Special Assistant to the prime minister on revenue and industry, took a forward-looking stance. In response to queries, he remarked, “There is no point in assigning blame. The sad reality is that the plant could not go into commercially beneficial production and has been idle for almost 12 years.”

On the opportunity cost of mishandling the project, he acknowledged the lapse: “Absolutely, everyone must recognise the consequences when a plant shuts down. It’s not just loss to investors; it’s the loss of jobs, loss of foreign exchange, foreign investment, investors’ confidence, and so much more.”

Expressing hope for the unit’s revival, he said, “All relevant ministries and departments are actively working to resolve NSCL’s problems and facilitate the swift resumption of production.”

Efforts to obtain the SIFC’s official stance were unsuccessful, as queries sent to multiple senior officers remained unanswered at the time of filing this report.

The core team of NSCL remains largely the same as the one that originally developed the project under the name of Tawairqi Steel Mills Ltd (TSML). The steel plant was a joint venture of Al Tuwairqi Holding of Saudi Arabia and POSCO of South Korea. The plant has the capacity to produce 1.28m metric tonnes per annum of DRI. Phase 1 of the DRI plant was completed at a cost of $350m, while Phase 2 and Phase 3 were contingent on the commercial success of the DRI plant.

Despite immense challenges, all through the past 12 years, since 2013, a small core team managed preventive maintenance and cold commissioning as per standard operating procedures to keep the plant at Port Qasim in fit-to-run condition.

The shutdown stemmed from a pricing dispute over feedstock gas. TSML claimed the government had promised concessional rates for feedstock at the project’s inception during General Musharraf’s tenure. However, after PMLN came to power in 2013, it unilaterally raised gas prices, revoked exemptions and curtailed industrial gas.

Repeated efforts of investors to resolve the matter through dialogue were unsuccessful, as the government refused to accommodate their pricing concerns. As losses mounted and the dispute dragged on, the original investors eventually withdrew, leaving the plant and the operational team in limbo.

In April 2022, US-based Ciena Group acquired the dormant plant, renaming it National Steel Complex Limited (NSCL). To revive operations, it is exploring hydrogen or coal-based syngas options. In a major step toward backward integration, Ciena secured iron ore mining rights in September 2023. Through its subsidiary, Alhadeed Paletisation Company, NSCL has sub-leased roughly 6,000 acres in Mashkichah, Nokundi, from private leaseholders. The company plans mechanised mining with dry beneficiation on-site and will set up a wet beneficiation and palletisation plant at its Port Qasim facility.

Published in Dawn, The Business and Finance Weekly, April 28th, 2025