Though the initial blending ratio of 15 per cent with the imported stuff is modest, it will gradually rise to an economic level after further lab tests are carried out at the Pakistan Steel facilities about the impurities and the iron content in it.
“We have made a modest beginning to rely on the local stuff after about 25 years of official debate on the issue,” Pakistan Steel sources said and hoped it would benefit the most backward region of Balochistan as well as rest of the country in the final analysis.
There had been a talk of using the Kalabagh iron ore when the Rs26 billion project (now Rs45 billion) near the Port Qasim was given a go-ahead signal during the first Bhutto regime during the 1970s. It was one of the most important mega projects undertaken by the Bhutto government, the other two being Port Muhammad bin Qasim to cater to the needs of the steel mills, and the creation of nuclear weapon facilities.
While the other two projects were completed, the dependence on the indigenous source of raw materials went into official debates on the ground that its use could prove uneconomic because of the content ratio of iron in it.
“The current bosses have crossed the Rubicon and intended to neutralize the negatives of their initiative after effecting economies in their production lines,” analysts said. “Credit must go to them as they have set precedent for the other sectors of the economy not to be so import-oriented at the cost of local resources.”
The estimated reserves of iron pre in Balochistan are said to be around 16 million tons, and the efforts are being made to exploit other possible sites in the area claimed to abound in the mineral wealth. The Saindak Copper and Gold Project in Balochistan has already been revived after its virtual write-off over the last decade; the use of Balochistan iron ore by the Pakistan Steel could lead to the goal of self-sufficiency in due course.
The Pakistan Steel and the Bolan Mining Enterprise (BME), a joint venture organization of the Balochistan government, have signed an agreement for the supply and use of 100,000 tons of indigenous iron ore each year to the former. It will be blended in the ratio of 15 per cent with the imported stuff of 1.8 million tons, and the test carried out shows that the final products are as good as those based on the imported iron ore.
The five-year agreement was signed by the director commercial, the Pakistan Steel, Tariq Baig, and Ghulam Ahmed, managing director of the BME, on behalf of their respective organizations.
The Pakistan Steel will utilize the iron ore from Dilband mines after blending it with the imported ores to an extent of 15 per cent, PS chairman Lt-Col Afzal Khan said. Since its inception, the Pakistan Steel has been importing 1.8 million tons of iron ore annually worth $50 million from various countries, including Australia, India, Brazil, and Canada.
The Pakistan Steel will save around three to 4.5 million dollars in foreign exchange each year after utilizing 100,000 tons of local iron ore. The figure may be modest, but viewed in the broader national perspective it signals a new beginning.
The Dilband ore will, however, be subsidized which costs a bit more than the imported ore, resulting in higher cost of production, but Pakistan Steel will bear the cost by providing subsidy to it at the rate of Rs350 to Rs400 per ton. It will cost Rs1,300 per ton as compared to Rs900 per ton of the imported stuff.
According to the international standards,the Pakistan Steel requires 60-65 per cent quality contents of iron, but the Dilband iron ore contains 35 to 40 per cent purity. However, research is being carried out to improve the quality of the local iron ore. During this time, the BME will install a beneficiciation plant to upgrade this ore.
A fresh supply agreement with the BME will be signed in due course after it reports that iron content in its raw ore has exceeded the minimum benchmark of well over 40 per cent after 15 months.
Before deciding to utilize Dilband iron ore, a team of the Pakistan Steel visited various iron ores bearing sites and collected different samples of 5,500 tons, which were got tested at Sinter Research Laboratory of the Pakistan Steel blending with imported iron in different proportions.
The decision to use the local ore will, it is hoped, open a door towards development of the area, providing job opportunities and paving way for infrastructure improvement, roads and means of communication.
Besides importing iron ore from various countries, Pakistan Steel had also arranged samples of iron ore from Iran on trial basis. On successful results, the PS will import 118,000 tons of Iranian iron ore and plans to book more shipments in future.
Dilband, which is 650km away from Karachi and 190km from Quetta, has a proven reserves of 165 million tons of iron ore. Pakistan is rich in mineral resources but has failed to fully exploit them during the last five decades.