PSM Board appeals to PM, opposes closure of steel mills

ISLAMABAD: Chairperson of the Board of Directors of Pakistan Steel Mills (PSM) Aamir Mumtaz has voiced strong opposition to the government’s decision to permanently close PSM, as detailed in a letter to the prime minister.

According to recent media reports, the government has opted to shut down the steel mills, citing substantial financial losses. However, Mumtaz argued that the decision bypassed the necessary consultation with industry experts and the Board itself, calling it hasty and lacking in due diligence. “The cabinet has been ill-advised on this matter,” Mumtaz stated in the letter available, emphasizing that the decision ignored proposals to explore all possible revival options. The SIFC/cabinet directive was issued without the Board’s approval, which had not formally resolved to support the closure.

Mumtaz added that closing the mills will not significantly reduce the annual losses, with approximately 90 per cent attributed to finance or interest charges on liabilities. He suggested that a comprehensive liability settlement could address these issues without closing down operations.

Highlighting Pakistan’s need for heavy-scale manufacturing, Mumtaz questioned how the government could justify the closure, given the industry’s importance to the national economy.The closure is expected to exacerbate the country’s unemployment rates. Mumtaz advocated for investing in the steel manufacturing sector to create new industrial units and tackle existing unemployment. He also warned that shutting down PSM without proper analysis could lead to the misuse and plunder of valuable land assets.

Mumtaz added that there is little public backing for the shutdown, arguing that people prefer to see a reduction in losses and further investment in the enterprise to create economic activity and jobs.

Mumtaz called for the government to focus on resolving PSM’s liabilities, reviving the mills, and maintaining large-scale manufacturing capabilities.He argued that resorting to closure could have severe economic and social consequences and called for a reversal of the decision. “This decision will also create further despondency; hence it needs to be reversed and a more positive plan is required,” Mumtaz added.

The steel mill’s labour union had earlier criticized the government's handling of the company’s future, especially its plans to establish special zones on its land. It accused the government and the SIFC of bypassing the council of common interests (CCI), undermining collaboration and transparency.

In a letter dated June 26, 2024, the union expressed that their concerns were ignored. They argued that disconnecting the gas supply to COBP and Refractories Tunnel Kiln on July 4, 2024, during heating mode, could financially harm PSM. The union highlighted the disregard for their proposal on bill payments post-June 30, 2024.