Pakistan Steel Mills — BrandWiki

Pakistan Steel Mills

Overview

Pakistan Steel Mill Corporation Pvt. Ltd.

native name lang	ur
type	State-owned enterprise
industry	Steel
founded	December 30, 1973‡R1R‡
hq location city	Karachi-75000
hq location country	Pakistan
predecessor	Karachi Steel Projects
area served	Pakistan
owner	Government of Pakistan
num employees	9,350 (2020)
homepage	www.paksteel.com.pk

The Pakistan Steel Mills Corporation,[2][3] colloquially referred to as Pak Steel, is a Pakistani state-owned company that produces long-rolled steel and heavy metal products in the country.[4]

Headquartered in Karachi, Sindh, the PSMC is currently the largest industrial mega-corporation in Pakistan, having a production capacity of 1.1–5.0 million tonnes[5] of steel and iron foundries.[4] Built with extensive contributions from the Soviet Union in the 1970s, it is among the largest industrial mega-corporation complexes,[6] vastly expanded in an enormous dimension with construction inputs involving the use of 1.29 million

History

After the creation of Pakistan in 1947, the Government of Prime Minister Liaquat Ali Khan realized the importance of the local production of iron and steel. Initially, the dependence on imports caused economic setbacks to the state in the form of high import costs. The initial idea and studies were conceived by the Council of Scientific and Industrial Research (PCSIR) and put forward the concept to the Five-Year Plans of Pakistan (1955–1960). In 1956, Soviet premier Nikolai Bulganin offered technical and scientific assistance to Prime Minister Suhrawardy regarding the steel mills and expressed interest in establishing the country's first steel mills.[12]

The project was comprehensively debated in the governments of Prime Minister Huseyn Suhrawardy and President Ayub Khan. The manufacturing process, supply sources of the requisite machinery and raw materials, plant site, domestic ore versus imported ore, ownership pattern, product mix and all foreign financing credit kept the project on hold for a considerable time.[4]

After 20 years of policy development and studies of PCSIR, President General Yahya Khan gave the approval of the recommendations of the state-owned scientific think tank, the Council of Scientific and Industrial Research.[4] Bureaucrats and scientists agreed upon a unified decision that the "Karachi Steel Project" would be sponsored in the state-public sector, under which a separate corporation sanctioned by the Companies Act, would be formed.[4]

In pursuance of this decision, the Pakistan Steel Mills Corporation Limited (PSM Ltd.) was commissioned and incorporated as a private limited company in a public sector in accordance with the Companies Act of 1913, to be established in Karachi, Sindh Province of Pakistan.[4] Contacts were made with the United States but the U.S. government showed lack of ambition and interest in the project; therefore the studies were sent to the Soviet Union, which took the initiatives.[13] The United States refused to give any kind of assistance.

Finally, an agreement was reached with the V/O Tyaz Promexport of the Union of Soviet Socialist Republics (USSR) in January 1969.[4] In 1971, Pakistan and the Soviet Union finally proceeded to enter into a government agreement, upon which, the Soviet Union agreed to provide techno-financial assistance for the construction of a coastal based integrated steel mill at Karachi.[4]

Labour development

In 1956, Krupp industries of West Germany offered to set up a steel mill based on Kalabagh iron ore, coal and most other minerals available within about 11 mi. The project was dismissed by the Ministry of Energy led by its minister Zulfikar Ali Bhutto who accepted the Soviet studies instead as Bhutto favored the idea to establish one single enormous steel mill based 100% on imported steel and iron ore instead of local ore at Kalabagh District. In June 1966, another West German steel firm, the Salzgitter AG, produced ~5,000 tonnes of quality steel from 15,000 tonnes of Kalabagh iron ore in the presence of some international experts, and sold it to Volkswagen. The company offered in August 1967 to set up Kalabagh Steel Mill of over 0.8 million tonnes per year capacity based on Kalabagh iron ore and imported coal at an estimated cost of Rs. 1.55Bn, including a foreign exchange cost of Rs. 878Mn. The European banks offered loans for this project, which confirmed the technical and financial viability of the project. All attempts were dismissed after projects were politicized enough in the civil bureaucracy.

The Pakistan Steel Mills was established as an integrated steel mill under a programme called the Nationalisation Programme in the 1970s.[4] The foundation stone for this gigantic integrated project was laid on 30 December 1973 by Prime Minister Zulfiqar Ali Bhutto.

Privatization of steel mills

Since its foundation, the steel mills has been under the management of government-ownership and strictly put under the close coordination of civil bureaucracy.[17] In 2006, Prime Minister Shaukat Aziz decided to integrate the steel mills under the intensified programme, called the Privatization Programme.[17] When the news reached the rest of the country, demonstrations and spontaneous protests began to take place against the government of Shaukat Aziz and sparked lengthy debates in parliament, which members of the opposition walked out of in disgust.[17]

The consortium involving Saudi Arabia-based Al Tuwairqi Group of Companies submitted a winning bid of $362 million for a 75% stake in Pakistan Steel Mills at an open auction held in Islamabad. The consortium including the Magnitogorsk Iron and Steel Works (Russia); the al-Tuwairqi Group of Companies (Saudi Arabia); and the Arif Habib Securities (Pakistan) paid a total Rs. 21.6 billion ($362 million), or Rs. 16.8 per share, to take control of Pakistan's largest steel manufacturing plant.[17] Tuwairqi Group of Companies, one of the leading business concerns in Saudi Arabia, also launched a $300 million steel mills project at Bin Qasim. The group will set up Tuwairqi Steel Mills (TSM), a state-of-the-art steel-making plant in the southern port city of Gawadar, Pakistan.

Controversies

The entire privatization programme of prime minister Shaukat Aziz came to a halt when the WATAN PARTY filed a petition under section 184 (3) through its Chairman Barrister Zafarullah Khan in the Supreme Court of Pakistan vide SMC No. 9/2006 against the privatization citing irregularities in the process which was accepted by the Chief Justice of Pakistan Justice Iftikhar Chaudry.[18]

The Supreme Court on 8 August 2006 held that the entire disinvestment process of the Pakistan Steel Mills reflected haste, ignoring the profitability aspect and assets of the mills by the financial adviser before its evaluation.[19] The transaction was the outcome of a process reflecting procedural irregularities, said the 80-page judgement in the PSM case.[19]

On 23 June, a nine-member bench of the Supreme Court had annulled the sale of the country's largest industrial unit to a three-party consortium and had directed the government to refer the matter to the Council of Common Interests (CCI) within six weeks. It had declared the $362 million transaction with the Russian-Saudi-Pakistan investors as null and void.[19]

Nationalization

PSM was deliberately destroyed by successive Governments to benefit the private sector Steel Mafia allegedly involved in more than $12 billion from 2005 to 2022 but persons at fault (beneficiaries & their facilitators in power corridors) remained unaccountable as yet. The privatization had the disastrous effects on steel mills, and it was lost by the private sector due to their inability to run such giant large-scale operations of steel mills.[19] Under the private sector, the steel mill suffered losses in its net worth and declining of production capacity. The Economic Coordination Committee (ECC) was forced to approved a bail out package after the private sector, the Tuwairqi Steel Mills pulled off its investment from steel mills and instead established another steel mill industry to compete against the steel mill.[19]

Despite all its problems, the steel mills is a paradigmatic employer and would rather see itself run into the ground than mistreat its long standing employees.[19] In the midst of all the troubles that it is facing, the mill started issuing letters confirming their jobs and started producing the heavy steel and iron materials.[19] After leading to an infernally long protest and inability proved by the private sector, the government of Prime Minister Yousaf Raza Gillani activated the nationalization programme after accepting the recommendations, despite protests lodged by the Finance minister Abdul Hafeez Shaikh.[20]

In 2011, the steel mill was put under the management of government-ownership, expanded and re-structured. The board of directors would be restructured and expanded, from the current nine to twelve members as well as approving another bail out plan.[20] In a matter of weeks, the private-sector voluntarily handed over the operations of steel mills to government-ownership management, a move that was widely appreciated in public society and workers' unions.[20] Since coming under government-ownership, the steel mills infrastructure and available capacity was restructured and expanded.[21] In 2012, Ukraine announced to provide technological development and help in the restoration of raw materials supply chain after viewing the performance of steel mills. The Ukrainian Ambassador quoted, "for major operational units of Pakistan Steel Mills is remarkable".[22] The Ambassador of Ukraine Volodymyr Lakomov said that Ukraine is keen to make a business relationship with Pakistan and the steel mill PSM will be a "symbol of friendship" between the two countries.[22][23]

Pakistan Steel Mills

Employee layoffs

History

Labour development

Dividends and business assets

Headquarters and production expansion

Environmental records

Privatization of steel mills

Controversies

Nationalization

See also

External links

References