Steel melters urge govt to revive Al-Tuwairqi mill

KARACHI: Steel melters on Tuesday urged the government to revive Tuwairqi Steel Mills – a manufacturing project of private Saudi-based Al-Tuwairqi Holding Co. in Pakistan – that was on halt for the last six years.

“The integration and operation of TSML (Tuwairqi Steel Mills Limited) will benefit the entire steel sector in Pakistan, besides (lead to) transfer of technology and employment generation,” the Pakistan Steel Melters Association (PSMA) said in a letter to the Prime Minister Imran Khan.

PSMA, having more than 120 members nationwide, advocated the revival of steel mills and its expansion through backward and forward integration. The association said TSML’s advanced technology could supply gas-based direct reduced iron (DRI) meant primarily for clean steel making, and producing high grade billets and rebars. TSML has the capacity to produce other products, including alloy steel primarily focused on import substitution.

After coming into production in January 2013, TSML’s DRI plant had to be shut down in September same year. By that time, TSML had produced and sold 60,300 tons of DRI mostly in the domestic market, but evidently on loss for the higher gas tariff of feedstock. TSML sustained an operational loss of $18.6 million in 2013.

DRI plant was constructed with an investment of $340 million, and made operational with a capacity of 1.28 million tons per year.

“Since then the plant, now for over six years, has continuously been kept in a fit-to-run condition,” an industry official said. “It is in the interest of the country that the project be revived with a total FDI (foreign direct investment) of over $1 billion and job creation for around 5,000 people.”

The official said the planned backward and forward integration would make TSML a fully-integrated steel complex.

The industry official said at present the country is importing almost all the semi-finished steel to meet domestic strategic needs.

Steel melters said TSML would have capability to produce most of these semi-finished products on the same international quality standards.

In November last year, ministry of industries forwarded a plan to the economic coordination committee for the revival of the TSML, proposing cheap gas supply, tax exemptions and threshold for new investment to make the state-of-the-art steel mill operational.

US-based telecom equipment supplier Ciena Group has already expressed interest in investing in TSML.

“The new investor has agreed on the tariff of $ 4.65/MMBtu (million metric British thermal unit) – practically zero subsidy tariff – and more over is also giving the government a relief by investing further into the project without running the DRI plant,” the industry official said. “Accordingly, there would be no pressure on the government to supply gas for the initial period of three years.”