KARACHI, Feb 19: A large scale expansion and modification along with setting up of new units are currently under way by steel and cement industry in order to meet growing demand on account of current boom in the construction industry and on anticipation of forthcoming huge water reservoir projects.

Industry sources said that leading re-rolling mills were presently active in balancing, modernization and replacement (BMR) of their units with many already had modified or expanded their units in anticipation of a spurt in demand if the government took any decision with regard to construction of big dams in the country.

"We are already over booked for our products as rising demand owing to current boom in construction and other industries where expansion activities are at full swing has put tremendous pressure on the steel and cement industry," a leading re-rolling mill owner told Dawn on Saturday.

The sources said that besides expansion in the steel industry, a couple of new cement plants were also being set up in anticipation of upcoming mega projects of water reservoir.

"Even the current demand situation warrants for further expansion in the steel and cement industry capacity because a boom in the construction industry and an enhanced industrial activity have raised the demand for these two basic items.

Owners of a leading brand of cement in Karachi are setting up a re-rolling unit, and two or three new cement plants, one at Nooriabad, are also being set up in anticipation of a strong demand arising after the launching of big dams in the country, the industry sources said.

At present total production of steel stands at 2.5 to 2.8 million tons, which include steel bars, angels, flat steel, etc. Out of this, 1.5 to two million tons are produced by those furnaces that produce steel products from scrap.

The remaining one million tons is produced by re-rolling mills, mostly located in Karachi. But most of the re-rolling mills are running on centuries old technology that consumes much power and does not follow quality control.

The steel industry like many other industries in Sindh was confronting with a number of problems. The industry complains that a huge capital is required for acquiring a piece of land, whereas in other provinces lands are available at very cheap rates. Besides, sales tax anomaly deprives the Sindh steel industry of level-plying field.

"Despite several reminders, the CBR authorities have failed to resolve the issue," lamented an owner of leading re-rolling mill. He said that mills buying billets from Pakistan Steel were subjected to sales tax that came to around Rs6,000 per ton, whereas steel melters pay Rs500 per ton which includes Rs300 to be paid to Pakistan Steel and Rs200 as sales tax to be paid to the department.

"We even assure the CBR chairman that once the anomaly is removed the prices of steel bars will decrease by Rs5,000 per ton. This will directly help the construction industry and 70 allied industries," he maintained.

Talking to Dawn, Abbas Akberali, director of a re-rolling mill, said that there was a need to introduce new technology in the steel industry which is primarily power consuming industry.

He said that steel melters wasted a huge amount of energy in their primitive method of melting and added that most of the re-rolling mills in cities were also based on obsolete technology.

Mr Akberali says that whereas 800 units are consumed by melters for melting a scrap of one, the same under new technology requires only 350 to 400 units for one scrap, which means saving of 400 units of power per ton.