ISLAMABAD: Pakistan's per capital consumption of steel is very low as compared to the global average, indicating huge potential for growth and thereby investment, an official in the Engineering Development Board (EDB) said.
Most of the countries have per capita consumption of around 175 kg of steel every year while Pakistanis consume only 38 kg, or just 21.7 percent of the global average.
In 2009, the per capita steel consumption in Pakistan was 35 kg as compared to 384 kg in China, 225 kg in Saudi Arabia, 123 kg in Egypt, 228 kg in Iran, 432 kg in Kuwait and 985 kg in Qatar.
The official said that a very modest increase in per capita steel consumption would increase steel requirement manifold, hence providing a great opportunity to investors to invest in this sector for good returns.
He said that the Engineering Development Board (EDB) has successfully persuaded a South Korean manufacturer of Iron and Steel products, Pohan Iron and Steel Company (POSCO) to invest in Pakistan steel.
POSCO, the world's number four steelmakers, is investing $200 million to expand the production capacity of Tuwairqi steel plant in Port Qasim Karachi.
Initially, the company has signed joint venture agreement with Tuwairqi Steel Mill (TSML) for investing $15 million in the DRI project of TSML by subscribing 15.3 percent newly issued common shares.
Subsequent to commercial operation of the DRI project, POSCO is keen on the forward and backward integration of the project by investing in the steel melting and mining sectors by increasing its shareholding in TSML upto the threshold level of 50 percent, the official added.
The move will eventually result in huge foreign equity inflow to build a state-of-the art integrated in the country along with creation of tremendous employment opportunities.
It may be recalled that four-member delegation of the POSCO visited Pakistan in March 2011 to explore the possibility of initiating the steel manufacturing business in Pakistan.
The delegation was given detailed presentations about the current status of local steel industry and future growth prospects by EDB.
They showed their satisfaction at the growth potential of steel manufacturing industry in Pakistan and later a visit of the delegation to Tuwairqi Steel Mill was also arranged by EDB.
A two-member team of TSML accompanied the Chief Minister of Sindh during his visit to South Korea as a follow up of he discussions between the two steel manufacturers.
After conducting due diligence, POSCO finally agreed to conclude a formal joint venture agreement.
It is pertinent to mention here that POSCO has been ranked at 4th position among all the steel producing companies of the world whereas it is at the top position in Asia.
The POSCO has its presence in a number of countries such as China, India, Myanmar, Japan, Malaysia, Mexico, USA, Australia, Canada and Vietnam.
Both POSCO and Al Tuwairqi Holding of the Kingdom of Saudi Arabia (the parent company of TSML) are in the steel business. The POSCO is in steel business for the last four decades whereas Al Tuwairqi is in steel business since late 1980.
Al Tuwairqi Holding is establishing a state-of-the-art steel complex with an operational capacity of 1.28 million tonnes per annum of DRI plant in first phase at Port Qasim, Karachi.
Copyright APP (Associated Press of Pakistan), 2011
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