“A delegation of the Chinese steel giant is currently on a visit to Pakistan and will meet Industries and Production Minister Ghulam Murtaza Khan Jatoi next week to present and discuss a plan for taking over management control of PSM,” an industries ministry official said.
This is a follow-up to the July meeting between Sinosteel executives and the industries minister where the Chinese company had expressed interest in bringing the loss-making PSM back on feet and expanding its production capacity.
In response, the minister asked the Chinese to draft an operational plan for discussion and to enable the Privatisation Commission to take a decision.
According to the proposed plan, sources said, Sinosteel would invest $778 million in PSM over the next three to four years to give a boost to its output as activity at the mill had slowed down drastically in the face of cash crunch.
In the first phase, Sinosteel will pump $170 million into the steel mill over a period of eight months to take annual output to 1 million tons. In the next phase, it will inject $373 million over a span of 18 months to take production capacity to 2 million tons annually.
In the third phase, it will provide $235 million to push the production of steel and its products to 3 million tons. At present, the mill has the installed capacity to produce 1.1 million tons.
By taking over PSM, according to sources, Sinosteel is not only targeting the Pakistan market to satisfy its growing appetite, but is also eyeing exports to neighbouring countries with the help of Pakistan’s ports and land routes.
The management control of PSM seems to be the most feasible investment for Sinosteel as the Chinese market has been largely saturated. This will also help the Chinese government and state-run companies to develop projects under the $46 billion China-Pakistan Economic Corridor in addition to using its own banks and human resource in PSM.
The interest in PSM came after a road show held by the Privatisation Commission in China to encourage investors to make capital injection into Pakistan’s gigantic industrial complex.
Sinosteel has a significant international presence as well as its ventures are running in India, Turkey, Iran, Vietnam and African states.
The Sindh government has also expressed the desire to bring PSM into its fold if the federal government wants to privatise the mill.
However, an official in the Ministry of Industries and Production categorically said if PSM was privatised and management control was handed over to any investor, the federal government would not transfer ownership titles of 5,000 acres of the mill’s land to the investor whether it was the provincial government or any private concern.
