Make in Pakistan: Salt industry needs a push to diversify exports

ISMAIL SUTTAR - Chief Executive, Hubsalt

TEXT: Salt as we know it as an essential mineral for human consumption, holds a lot of opportunities for Pakistan if seen from the right perspective. In recent past, much have been discussed about the edible rock salt on the news channels and social media for all the right reasons-the benefits of our distinctive pink shaded rock salt from Khewra, its surge in demand worldwide, and the opportunities missed that could earn heaps of exports proceeds presumably.

However, we often ignore the real potential of salt industry by seeing it, as an ingredient that makes our food taste better. The total salt consumed annually for human consumption is only 10% of global production. Where does the remaining 90% go is where exactly lies a number of opportunities Pakistan needs to explore.

The major portion of salt production is used in the chemical industries. These industries use electrolysis process of sodium chloride to produce chlorine and sodium hydroxide (caustic soda) which are commodity chemicals required by industry. Without salt the chemical industry, glass production etc will be unimaginable. The market demand from the glass application is over half of the overall soda ash demand. It is also the quickest-increasing segment for soda ash. EDC/VCM/PVC accounts for over one third of the overall chlorine demand.

The annual world production of salt is around 300 million metric tons, mainly extracted from two different sources i.e. sea water and rock salt mines. The most common methods used for production of salt are rock salt mining and sea salt evaporation which is also known as solar salt. One third of world's salt is produced by solar evaporation of sea water.

The largest solar salt facilities in the world produce approximately 8-10 Million tons of industrial salt and caters the need of hundreds of industries across the world. Mexico and Australia are known for such enormous scale of production. The other salt producing countries are China, USA and Canada. Pakistan despite having one of the largest salt mines and a huge coastal belt which is ideal for solar salt production is nowhere in the list of top producers. Whereas, India amongst one of the top salt producing countries in the world, operates through a number of small salt vendors yet exports 227 Million USD worth of salt every year. In 2018 India alone exported 13 Million tons of salt whereas Pakistan could only export 0.3 Million tons.

Pakistan exports yearly 250 thousand tons of rock salt only. The reason for such miniature level of exports is the low value of the product which makes this business more about the logistics than the product itself. The mines are located in the northern areas of the country. After extraction, the salt needs to be transported through long distance of approximately 1000 kms to reach the port which adds up to the cost making it highly expensive to be sold to industrial consumers. Industrial salt is consumed in bulk therefore it is necessary that the salt works are established at the shortest possible distance to the point of loading.

To establish a solar salt facility, flat land is required near the coastal areas with specific meteorological conditions. Coastal areas of Balochistan are gifted with such terrain. Solar salt production is typically the capturing of salt water in shallow ponds where the sun evaporates most of the water. The concentrated brine precipitates the salt which is then gathered by mechanical harvesting machines. Usually two types of ponds are used. First is the concentrating pond, where the Calcium Salts are salted out. The second is called the precipitation pondswhere the salt crystalizes. The salt is then harvested and stocked for dispatch to customers. The same method of solar salt production is being used by various salt producers in the world mainly in Australia and Mexico.

For a solar salt project to be successful it is crucial to construct a jetty from where the salt is loaded directly through conveyer belts on the huge ships anchored at the jetty. As an alternative barge can be used to transport salt to the port where it can be loaded on ships through cranes. This method is costly than the former one as it involves extra handling cost resulting in lower profit margins. This is due to high volume low value nature of salt as any extra handoff in the supply chain will surge up the cost per unit substantially.

Solar salt works are classified as the most environment friendly industrial projects as it does not produce any waste or residue. It does not require influx of raw materials and the production depends on natural green energies as the process only uses natural wind and solar heat therefore no chance of shortage of neither raw Materials nor energies such as gas, electricity, water etc.

A solar salt project can offer a lot to Balochistan in terms of generating economic activity, earning foreign exchange and creating employment for the people and more importantly the youth. The project is of such an impactful nature that has everything to trigger a number of projects that can turn Balochistan into a huge chemical complex. Large amount of flat barren land of hundreds of thousands of acres ideal for solar salt, is available along the Balochistan coast which can be expediently used to replicate the solar salt facilities like the ones in Mexico and Australia.

For a country like Pakistan with huge costal area of around 750 km in Balochistan, Solar salt works can provide immense benefits to the economy. The industry demand is quickly increasing in the emerging economies of the Middle East & African continent. With the growing market for packaged and processed food, the demand of soda ash in the food processing sector is also increasing at a quick rate. China being the largest consumer of industrial salt mainly drives the growth. There have been recent investments made in the chlor-alkali industry in the Middle East and African region. Further, the increasing cross border trade is expected to create enormous opportunities for salt producing countries.

China despite being the world's largest salt producer is also net importer of salt. With rapid shut down of the existing salt facilities in China the import requirement is surging. Majority of the salt import in China comes from India which contains impurities that result in substantial increase in cost when treated. A solar salt facility can bring upto half a billion dollar in terms of foreign exchange with no import costs except for initial investment in machinery. Government of Pakistan in these hard time should focus on diversifying the export base and support such exemplary projects through Public Private Partnerships. Considering huge continuing large balance of payment crisis, projects like these are necessary for the revival of our economy. The increase in the demand and supply gap in China and the rise in demand in Middle East African region is an opportunity waiting at our doorsteps but is also feared to be capitalized by India of course if we didn't take immediate measures.

Copyright Business Recorder, 2020