Ismail Suttar has been associated with Hub Pak Salt Refinery, a family owned business, since its inception. With a single-minded focus to put Pakistan on global salt map, he has worn all sorts of hats at his business before becoming its CEO about three decades ago. Today, according to industry estimates, Hub Pak, under its brand Hub Salt, is the biggest salt manufacturing company of the country. Mr. Suttar is also currently serving as President of Employers’ Federation of Pakistan (EFP) and was until recently the President of Lasbela Chamber of Commerce and Industry.

The company was recently in the news courtesy its plans to set up the region’s largest salt manufacturing plant in Balochistan with earnings potential of about one billion dollars in exports per annum. Last week BR Research met him to understand the vision and goals behind the project, the challenges Hub Salt faces along the way, and overall dynamics of global and local salt market. Below are edited excerpts:

BR Research: Salt is not a conventional industry in this country. Can you take us through the history of your business and how did you enter this industry?

Ismail Suttar: My family was in the business of manufacturing match sticks, which we closed in 1983. About the same time, we were approached by a businessman who wanted to sell off his salt manufacturing facility. That’s how we entered this business.

However, at that time, our level of understanding regarding salt was limited to it being used as table salt. Gradually, we realized its importance as a major resource for chemical industry. Six months into the business, we were approached by an oil drilling company that used to import salt, but due to some problems it was looking to source it locally. Since then, we have been their supplier. We later ventured into textile industry that was using a very unrefined, raw form of salt. Using a better quality of salt reduces their usage for dyes and chemicals that are rather expensive compared to the cost of salt.

Eventually, our Tharparkar plant was set up when Engro Polymer approached us for a supply that was beyond our capacity at that time. After surveying and selecting a few areas, we obtained the lease from the provincial government and set up the first on-site plant. Although there were salt lakes available at a lesser distance, we preferred the salt lakes farther within Tharparkar because the salt from those lakes has better quality as the levels of impurities are much less in these lakes as compared to other locations in Tharparkar.

BRR: What is the global consumption pattern of salt within consumer and industrial segments?

IS: Industries consume 90 percent of the salt produced globally, while the remaining 10 percent is for edible purposes, mostly used as table salt. Within the industrial market, 60 percent is used in the Chlor-alkali industry, which is used in different applications in organic chemicals, glass industry, paper industry, textile, water treatment, construction amongst others.

Chlor-alkali industry means significant usage in caustic soda and soda ash production. And then several by-products also such as sodium hypo chloride, etc. Other associated industries are also attached to it like, glass, PVC, etc.

To be precise, of the 300 million tons salt consumed globally every year, chemical industry alone consumes 180 million tons of salt, 30 million tons in food industry, and 40 million tons is used in deicing. USA is a major consumer; it consumes about 68 million tons of salt for the purpose of de-icing of roads in a single season. Canada and Europe are also two other major consumers.

BRR: And what are the major types of salt worldwide?

IS: Of the 300 million tons per year, about 120 million tons is solar salt, which is what our project is about, 80 million tons is rock salt, 100 million tons is brines – each have its own different properties and preferred uses.

BRR: According to PMDC data, Pakistan has huge reserves of salt, 1 billion+ tons each in Khewra and Warcha, a few billion tons in Jatta, Bahadar Khel and Karak, and millions of tons in other ranges. Why then we don’t export decent quantities of salt?

IS: Salt is a geographical product. It is mostly consumed in the surrounding areas because the freight cost is often more than the cost of the salt. Freight cost can go as high at $22/ton, so it does not make economic sense to transport a product that has a selling price of $18/ton. That is why, if Karachi has sea salt, the city and its nearby areas will consume sea salt rather than rock salt; likewise, there is higher consumption of rock salt in Punjab, because rock salt is found in abundance in Punjab. And this is why although Khewra mine is a huge resource, containing billions of tons of rock salt, it cannot be exported due to high transportation cost.

BRR: Is that why 23 percent of our salt is exported to India?

IS: Yes, it used to be. In fact, it used to be higher, up to 35 percent. But that export has taken a hit after the closure of Wagah border. When it used to be sold to India, it mostly served the markets of Delhi and Agra because of the region’s proximity to salt mines in Pakistan’s Punjab. Our company still sells to India, but those exports consist mostly of value-added products in small volumes.

BRR: If rock salt from Punjab regions cannot be exported, what then is hampering the growth of domestic salt-hungry industries from developing in the region?

IS: The same reason why there is no sprouting of industries anywhere in Pakistan in general. Pakistan has three big problems. One is the lack of visionary leadership, the second is costly electricity which is at Rs 21/unit when it should be around Rs7 to Rs9 per unit; and third is expensive gas. Both the biggest and the smallest of businesses are suffering due to these problems.

BRR: Let us talk about your new project now; what got you interested in the project?

IS: Today, Mexico has the largest solar salt project spreading over 80,000 acres with a capacity to produce 12 million tons. But it is in one corner of the world – far from the major market, that is, China. As I mentioned earlier, Chlor-alkali makes about 60 percent of the total industrial usage, and China is one of the largest producers of Chlor-alkali products. Chlor-alkali industry is our target market.

Today, Pakistan is nowhere to be seen on the global map of major salt producing nations, despite it having the second largest reserves in the world. Pakistan produces about 3 to 4 million tons annually of which barely 0.2 to 0.3 tons is exported, which is peanuts in a global market size of 300 million tons per annum.

BRR: What is the cost of the project, and how much will it contribute to the country’s export earnings upon completion of the project?

IS: The cost of the project is around $360 million, under public-private partnership mode. We expect it to add roughly $1 billion to Pakistan’s export earnings. That’s about four to five percent of Pakistan’s total exports at present. It also benefits the country in terms of no imports, and negligible requirement for electricity and gas sources, or any form of subsidy.

BRR: What do you need to invest under public-private partnership mode?

IS: This project will be spread over 150,000 acres of land along the coastline; this can only be achieved through the involvement of the government.

BRR: Pakistan has a huge coastline. Which particular area are we talking about?

IS: It is premature to disclose the location.

BRR: Why is such a huge piece of land required?

IS: The larger the land, the better the quality of salt. Salt industry runs on the basis of quality. The product is of low value; in order to sell large volumes, the quality has to be premium. Our company has the technology to make quality salt with almost zero impurities. Salt has three major impurities: calcium, magnesium and sulphate.

We plan to make about 11 ponds; the first pond will be at the mouth of the sea and the last will be several kilometres into the land. As the sea water will be transferred from one pond to next, impurities will be removed. Therefore, the larger the land, the purer the salt, hence, better the quality. BRR: What is the major capital expenditure in this project?

IS: The construction of the jetty is a major cost. Salt cannot be handled in a stockyard where cement has been handled; cement has calcium, and calcium is the enemy of salt. It ruins its quality. So, we will need a dedicated jetty that solely handles salt, and no other cargo. Moreover, dredging will also be required as the required depth for the jetty to handle large vessels is found 18 kilometers into the sea. This is another major cost of the project.

And when do you expect the financial close?

IS: We expect the financial close by June 2021.

BRR: What gives Hub Salt an advantage over other companies that sell salt? And if the potential is so huge then why didn’t other salt players get into the business.

IS: Other companies that sell table salt sell a lot of other things within food sector; salt is one part of their portfolio. At Hub Salt, we only make salt and salt-based products.

There are about 2,300 salt makers in Pakistan but many of them are informal players whereas those that are formal are non-corporates. We are the first company in Pakistan to produce IV-grade-of sodium chloride used drips at hospitals. We export to Malaysia, Bangladesh, and the US where we also offer medical and pharmaceutical grade saline solutions. In other words, we take salt as a serious profession, which is why we have already spent about Rs200 million in scoping studies and R&D for various salt projects.

BRR: And what gives Pakistan’s coastline an advantage as against other coastlines in the region, such as India or Sri Lanka?

IS: India has a similar problem as Sindh. There isn’t a large piece of land; instead, there are small pockets of salt lakes, ranging from 1,000 acres to about a maximum of 8,000 acres whereas we are already working in Tharparkar over 9,000 acres. Besides, while India itself is also a major exporter of salt, at 22 million tons, due to its rising internal demand, its share is gradually contracting. Of the 22 million tons India produces, it exports about 4 to 6 million tons.

The Sri Lankan coastline on the other hand is rainy. If rain falls into the salt works, the content is mixed. It takes about four months to come back to the previous state, therefore it is not conducive for salt manufacturing.

BRR: Upon completion, where will the project put Pakistan on the global map as a salt producing country?

IS: The top salt-producing nations at the moment are: China at 65 million tons, followed by USA at 57 million tons and India at 21 million tons.

In the first phase of our project, we are targeting 24 million tons. And Pakistan already produces about 4 million tons. Totaling at 28 million tons, Pakistan will replace India as the third largest salt producer of the world by 2023. We will also have a second phase of the project in which we will keep expanding gradually. I aim to make Pakistan the largest salt producing nation of the world.

And once our project is set up then many other salt hungry industries can be set up in our backyard; industries like chlor-alkali, caustic soda, soda ash will have a great model because our jetty will already be there, which means they can import other inputs, such as coke needed for soda ash.