Pakistan's Tuwairqi Steel to Begin Operation by 2009

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Researched by Industrial Info Resources (Sugar Land, Texas)--Tuwairqi Steel Mills Limited (Karachi, Pakistan) will begin operation of its state-of-the-art steel manufacturing facility by June 2009. The first phase of the steel plant, with a production capacity of 1.28 million tons per year, will cost about $260 million. The estimated investment for the second phase, which will increase the capacity to 1.5 million tons per year, will be about $250 million. The investments will have a debit-equity ratio of 65:35. The second phase, likely to begin by mid-2009, is expected to be ready for operation by 2010. The steel manufacturing unit is situated in the industrial belt at Port Bin Quasim about 40 kilometers southeast of Karachi. Pakistan Steel Mills (Karachi), the country's premier steel manufacturer, has provided 220 acres of land on rent to Tuwairqi Steel, a subsidiary of Al Tuwairqi Holdings (Dammam, Saudi Arabia), one of the top business houses in Saudi Arabia.

Tuwairqi Steel's steel plant will use the latest direct reduced iron technology. This technology consists of two units: a shaft furnace that reduces the iron ore and a reforming chamber that produces gas that flows into the shaft furnace. The process uses both pellets and iron lumps as raw material. The technology is established as an optimum option, as it is energy efficient and has a low impact on the environment. The reforming gas can also be recycled. Tuwairqi Steel will use 30 megawatts (MW) of electricity for the first phase that will be generated from a captive plant. For the second phase, 180 MW of power will be supplied by the Water and Power Development Authority (Lahore, Pakistan). Tuwairqi Steel will carry power to the steel plant using its own transmission lines. About 45 million cubic feet of natural gas will be used every day -- 5 million cubic feet for power generation and 40 million cubic feet as raw material. Tuwairqi Steel has identified Pakistan and other gulf nations as potential markets for their products. The steel plant will manufacture steel billet used in wire rods, seamless pipes, rebar and other construction material. Iron ore will be procured from Baluchistan.

Baluchistan is gaining importance in Pakistan because of the abundance of minerals and ore deposits. Recently, iron ore deposits of 50 million to 73 million tons have been identified in Chigendik, Chilghazai and Pachin Koh, which lie in the Chaghi district of Baluchistan. The Dilband area of Baluchistan is also known for its iron ore deposits. It is estimated that Baluchistan has more than 273 million tons of iron ore deposits. This province is also rich is antimony, chromite, lead-zinc and copper.

Pakistan's demand for steel has been growing steadily. In 2007, the country consumed more than 5 million tons of steel, of which more than 2.5 million tons was imported. The country has plans to increase its production capacity to 10 million tons per year by 2010 and 15 million tons per year by 2020. The Engineering and Development Board of the Ministry of Industries has been working on developing a new steel policy that will help increase Pakistan's organic steel production capacity and reduce its dependence on imports. The board also recently announced that it plans to encourage private and foreign investors to set up mini steel units. An international consulting company will soon be identified to carry out the feasibility study for this project. The raw material will be from the Dilband and Kalabagh mines.

Pakistan Steel Mills will also enhance its production facility to 3 million tons per year in three stages. The first phase, to increase capacity from 1.3 million tons per year, is in progress. The second phase, which will add 200,000 tons, will be completed in 2010. By 2012, the facility is expected to produce 3 million tons per year of steel. Notwithstanding the current 20%-25% slump in steel consumption because of the economic slowdown, Pakistan is optimistic that in the long term, its steel sector will help bolster its economy.

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