Friday, June 3, 2011

Pakistan's only steel company, created more than 20 years ago with Soviet technical expertise and financial help, has come full circle after being sold last month to a Russian-led consortium.

 Pakistan Steel is the latest state company to be fattened up for privatisation and sold off to a foreign bidder.
Spread over 29 sq miles, the sprawling steel complex is based near Port Mohammad Bin Qasim, in the south of Pakistan, where two 4km-long conveyor belts transport the raw materials used for steel production - iron ore and coal - to the factory.
The sale was resisted by unions and sparked lengthy debates in parliament, which members of the opposition walked out of in disgust.
They argued that at $362m, the government's 75% stake in the company was sold off too cheaply - and it should have kept hold of such a strategic asset.



Chequered history
The consortium that bought Pakistan Steel is backed by a Saudi Arabian steel mill and a Pakistani brokerage company based in Karachi. They are taking over a firm that was seen until recently as a white elephant.

The firm also upgraded equipment to make it less labour-intensive and has cut its workforce by about 35% over the last five years.
The current Chairman, Lt Gen Abdul Qayyum, who has been with Pakistan Steel for two-and-a-half years, is credited with helping to transform its fortunes.
That was no mean feat for a business which is reported to have gone through about two dozen different chairmen since production started in 1981. But Gen Qayyum said he had taken the company as far as he could.
"We are proud to have made it profitable and we are selling it to private owners, who are actually the steel people. They will invest more money, make it more efficient and more profitable."
Investment
At the moment, the plant, which is running at virtually full capacity, accounts for about a quarter of the country's demand for steel.

The retired lieutenant general, dressed in the company's regulation boiler suit, showed us around the rolling mills, where the molten steel is cooled, flattened and rolled into coils.

en Qayyum said privatisation would bring in more investment, helping Pakistan Steel to increase its domestic market share and export steel to its neighbours.
But the plant will need a big increase in investment if it is to compete with more efficient steel plants in South Korea and Japan.
Another concern among some workers is that the new Russian-led consortium will use the plant to sell steel to Russia, bypassing the domestic market.
Union officials at the plant were "on message" about how the company welcomed privatisation. But the leader of one of the firm's biggest unions, interviewed outside the factory, was more circumspect.
"A large number of employees, who are breadwinners for their families, will lose their jobs," warned Zaffar Khan, general secretary of Pakistan Steel Labour Union.