History of Pakistan steel mill:-

After independence in 1947, it did not take long for Pakistan to come to the realization that progressive industrial and economical development would be impossible without the possession of a self reliant iron and steel making plant. The dependence on imports would cause serious setbacks to the country along with an extortionately high import bill which would be impossible to support.

The initial idea for a domestic iron and steel mill was put forward in the first five year plan of Pakistan (1955 - 1960). Debates over the manufacturing process, supply sources of the requisite machinery and raw materials, plant site, domestic ore versus imported ore, ownership pattern, product mix and above all foreign financing credit kept the project on hold for a considerable time.

In 1968 besides other factors, it was considered by the Government of Pakistan that a basic steel industry should be established in the public sector, as public sponsorship of the project would enable integrated development of the steel industry in the country. In light of this, the government decided that the Karachi Steel Project should be sponsored in the public sector for which a separate Corporation under the Companies Act be formed. As a result on the 2nd of July, 1968 Pakistan Steel Mills Corporation was setup as a private limited company in the public sector in accordance to the Companies Act of 1913, with the objective to establish and run steel mills at Karachi and other places in Pakistan.

In January, 1969, Pakistan Steel concluded an agreement with V/O Tiajproexport of the then USSR for the preparation of a feasibility report into the establishment of a steel mill at Karachi. Subsequently in January, 1971 Pakistan and the USSR signed an agreement under which the latter agreed to provide techno-financial assistance for the construction of a coastal based intergraded steel mill at Karachi.

The foundation stone for this gigantic project was laid on the 30th of December, 1973 by the then Prime Minister Mr. Zulfiqar Ali Bhutto. The mammoth construction and erection work of the intergraded steel mill, never experienced before in the country, was carried out by a consortium of Pakistani construction companies under the supervision of Soviet experts.

................................................................ Pakistan Steel did not only have to construct the main production units but a host of infrastructure facilities involving unprecedented volumes of work and expertise. Component units of the steel mill numbering over twenty and each a big enough factory in its own right were commissioned as they were completed between April, 1981 to August, 1985 with the Coke Ovens and By Products Plant coming online first and the Galvanizing Unit last. Commissioning of Blast Furnace Number 1 on the 14th of August, 1981 marked Pakistan's entry into the elite club of iron and steel producing nations. The project was completed at a capital cost of Rs. 24,700 million. The completion of the steel mill was formally launched by General Zia-Ul-Haq the then President of Pakistan on the 15th of January 1985.

Today Pakistan Steel is the country's largest industrial undertaking having a production capacity of 1.1 million tons of steel. The enormous dimensions of the project can be visualized from the construction inputs which involved the use of 1.29 million cubic meters of concrete, 5.70 million cubic meters of earth work (second to Tarbela Dam), 330,000 tons of machinery, steel structures and electrical equipment. Its unloading and conveyor system at Port Qasim is the third largest in the world and its industrial water reservoir with a capacity of 110 million gallons per day is the largest in Asia. A 2.5km long sea water channel connects the sea water circulation system to the plant site with a consumption of 216 million gallons of sea water per day.

The above figures illustrate the massive civil works, intricate erections, installations of sophisticated electrical and mechanical equipment. With the completion of Pakistan Steel, the local contractors gained the technical ability till then unknown, which they utilized later to undertake million dollar projects both within the country and abroad especially the Middle East.

Pakistan Steel Mills crisis:-Tuesday, January 10, 2012 - The industrial and economic development of a country is not possible without the establishment of a steel plant. It was necessary for Pakistan to establish a steel mill to make progress in the modern world. The US, UK and their allies were reluctant to sell a steel plant to Pakistan. American, British and French private firms were strictly prohibited to export steel plant or steel manufacturing items to Pakistan. It was a tough job to establish the Pakistan Steel Mills. The dependence on other countries, in steel production, could cause a huge loss in the development of the nation. Naturally Pakistan was struggling to launch a steel mill from General Ayub’s era. The very concept of still mill in Pakistan was a threat to exploitative imperialistic forces.

Pakistan Steel Mills was founded in January 15, 1985. The gigantic project was carried out under the overall supervision and techno economic assistance of former Soviet Union. Nonetheless, the consortium of Pakistani construction companies played an important role in its establishment. The basic purpose of the Mills was to build a basic economic infrastructure and industrialize the country at a faster pace. It is Pakistan’s largest heavy mechanical industrial complex with 20 component units. Professor Dr. Niaz Muhammad, Wahab Siddiqui and Russian scientist Mikhail Koltokof are considered to be the real founders of Pakistan Steel Mills. Niaz Muhammad, the Pride of Performance holder, was a diligent person. His services were also highly appreciated by the USSR. A large number of employees including scientists and technical staff got training from him.

Pakistan Steel Mills is located at a distance of 40 Kilometers Southeast of Karachi. It covers an area of 18,600 acres. The main plant covers an area of 8,070 acres while 200 acres of land is covered by industrial water reservoir with a capacity of 110 million imperial gallons per day. It is the largest reservoir in Asia. It has a production capacity of 1.1 million tons of raw steel. This capacity is not very economical. Nonetheless, the Mills had a built-in potential for expansion up to 3 million tons. Pakistan Steel had 28,000

employees in 1991 while it required less than 14,000 personnel. It produced 0.75 million tons steel annually.

It started at an estimated cost of Rs14.287 billion and commissioned at a cost of Rs 24.7 billion in 1985. The average production efficiency of the mill is not more than 70 to 80 percent probably because of the inferior quality of the machinery. The Pakistan Steel Mills manufactures industrial material such as steel, coke, pig iron, rolled billets, long rolled steel, hot and cold rolled coils and sheets, galvanized coils, corrugated sheets and heavy iron products.

The company also sells by-products created during steel production, including coal tar, granulated and boulder slag, Ammonium Sulphate, Oxygen, Nitrogen, and refractory bricks. The pivotal role of Pakistan Steel Mills cannot be ignored in the making and strengthening of Pakistan Defense. The Mills also supports Pakistan’s defense production in producing tanks, planes, ships, missiles, nuclear programmed and more. The Mills has leasehold rights over an area of 7520 acres in the area of Thatta district.

It may be interesting to note that Pakistan Steel Mills remained a profitable organization from 2001 to 2008. Even then the Musharraf regime, in May 2006, privatized it. Saudi Arabia-based Al Tawairqi Group of companies, Russia’s Magnitogorsk Iron & Steel Works and local firm Arif Habib Securities paid a meager amount of Rs21.6 billion ($362 million), or Rs16.8 per share, to take control of Pakistan’s largest steel manufacturing plant. It is believed that privatization of the Steel Mills was made under the pressure of certain foreign institutions such as IMF during Musharraf’s era. The whole process of privatization was considered as the ‘largest dacoit’ in the history of the country. Moreover the employees of the Mills raised a lot of hue and cry against the government’s decision. The reaction against the government’s unwise decision was intense; it rocked the government. The Transparency International-Pakistan concluded that the deal was not fair as it was not acceptable for some competent bidding parties. On June 23, a nine-member bench of the Supreme Court annulled the sale of the country’s largest industrial unit to a three-party consortium due to irregularities in the process of privatization. The apex court concluded that the government decision in relation to Mills had been taken in unexplained haste, ignoring profitability aspect and assets of the Mills and directed the government to refer the matter to the Council of Common Interests within six weeks. The apex court made it clear that squandering of national assets would not be tolerated.

Pakistan Steel Mills is facing a severe financial issue nowadays. It is operating in a tough competition atmosphere. It is facing loss of billions of rupees. It has to pay off huge bank loans and government taxes. It is, in fact, on the verge of collapse and bankruptcy and has asked government for 10-12 billion rupees bailout package to come out of crisis while Cabinet Committee on Reforms has approved a bailout package worth Rs6 billion to tackle the situation. There may be many factors for the current crisis in Pakistan Steel Mills including low capacity utilization, liquidity crisis, rise of the cost of coal in the international market, mismanagement on the part of administration and political involvement and interference from the government side.

The Mills has become a residence of the powerful mafia involved in corruption. The Federal Production Minister Anwar Ali Cheema wants that still mills should be privatized because of unbearable financial burden. He claims that Pakistan Steel Mills is a sick unit ‘whose losses are getting out of control’. The question is: who is responsible for the huge losses in the Mills? Is this a deliberate attempt to create an atmosphere for the privatization of the Mills?

The Russian firm, Tiag Proom Export Company, has shown its interest to reconstruct and restructure Pakistan Steel Mills and make it a profitable organization with new machinery and modern technology. According to Rizichenko, the Director of the company, the production of PSM can be increased to 0.4 million tons annually. A number of employees can also be adjusted in this process.

Unfortunately this Corporation has been working without a permanent and full-fledged chief executive officer for the last several months while the losses are increasing day by day. It is stated that a particular mafia is trying to make excuses to legitimize the privatization of the organization. This mafia is still struggling to purchase the Mills at very low price. It is said that certain corrupt bureaucrats and high-ups are actively engaged in their planning to further destabilize economic situation of the organization.

The financial condition of the Steel Mills has deteriorated rapidly. The employees are much worried about their monthly wages or salaries. Several power generation units have been shut down. There is a shortage of raw material and production has been reduced further. The management of the

Steel Mills has been blamed for using billions of rupees from the workers’ gratuity and Provident Funds. Because of the crisis of capitalism on a world scale, the position of the national economy is already well known to the general public.

It is stated that the CBA People’s Workers’ Union is playing the role of a big mafia as it has lost its link with the real workers of the Mills. These union leaders have their own vested interests. There are complaints of corruption about the union representatives and union office holders. A number of shops run by these persons have been exempted from duty. They are going to safeguard their own vested interests instead of fighting for the workers’ rights. It is believed that Union has been exploiting the administration for their personal benefits and has failed to present any appropriate charter of demands for the welfare of the workers. The corruption culture in the recruitment and employment of the irrelevant unprofessional persons has made it a sick industry. It’s high time appointments made on merit.