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Chinese steel giant offers to pump $778m into Pakistan Steel Mills (PSM)

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Chinese steel giant offers to pump $778m into PSM
By Peer Muhammad
Published: October 10, 2015

ISLAMABAD:
China’s largest steel company Sinosteel Corporation has offered an investment of $778 million in revamping and enhancing the production capacity of Pakistan Steel Mills (PSM) over the next three to four years.

“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 told The Express Tribune.

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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.

Read: Pakistan Steel Mills: Hinting at cutoff, ECC approves another Rs1 billion

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.

Read: Steel Mills: an ailing, sick unit on the govt’s balance sheet

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.

Published in The Express Tribune, October 10th, 2015.
 
My humble opinion is to privatise it asap , lets give it to experts rather than carrying the carcass ourself
 
Pakistani government can put steel mills on a right path but only will power is needed. These corrupt politicians are deliberately destroying all strategic institutions. They have their own airlines & steel mills.
 
Good news!
As PK civilian economy is picking up as well as growth in defense industry, so will be strong demand of steel.
Whatever path PK bros chose here, let's ramp up production capacity.
 
PSM was flourishing in Mushy era, these politicians are pethatic as hell. No matter now much aid you pump into PSM, these politicians will eat it in months and PSM will again become dry to core.

Well I can't comment on domestic politics, but I believe Sinosteel will try within their capability to ensure the investment serves its purpose, i.e. PSM must increase production capacity.

Good luck bros!
 
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retain 60% of shares and privitize the rest :-)
 
let's see who gets 778 m in his personal bank account in some swiss bank
 
Desperate times calls for desperate measures. There is no other option left except to privatize the white elephant.
There was a time when PSM was one of the pillars of our economy. so sad to see an important national asset to go away like this.
Fu*k PPPee clan.
 
PPP has Killed Steel Mill & it is Not in past era .. but Steel Mill is considered a Leather Belly able to Feed Every Favourite Jyala's Mouth .... Hundreds of Jobs are given for No Good Reason as a Political Favour ... In addition to It they do not do any work .. Sit & form Unions etc etc.

I have Work next door to PSML for 5 Years in a Private Automobile Company , know some people from PSML & get to hear inside Information at Friday Lunchs .... what needs to Be done is PRIVATIZE this (now turned into) white Elephant ... Cut Down on the over bearing .. good for Nothing Workforce ... Regulate the Unions ...

Then the PSML need to upgrade its Capacity as well as Capability ... (Many Do not Know that No Company in Pakistan Make High Grade Steel) ... next door to PSML is Suzuki & Toyota .. the BOTH IMPORT steel ... & upgrading the PSML can automatically result in decrease Foreign Imports of Such & similiar Steel Saving Lots of Foreign Reserve but again "Productive" employment.

In addition to Privatization of PSML a natural competitor is already in the Market .. being Mauled by Govt. Mismanagement .. Goovt. NEEDS to sit with Tuwariqi Steel Mills , convince them to Re-open thr establishment ... (a Mutually Beneficial Deal can easily be Struck with them , i.e. Agreeing to Lower gas Rates in return of Shares of the Company) .. coz ONE ... it is No where near to What we have already poured into PSML & we r getting Ownership shares hence Profit Participation as Well as the Amount we will be providing (in the start) to Tuwariqi it would be Saving up FIVE times in decreasing imports ...

Once these Two Companies Will work in Free Market, competition will increase, resulting in More FDI in the companies as well as more increase in capacity & Increased Capability ....

I have NO CLUE why the Govt is not taking this Bold Step,,, Steel Industry is the Core of a country economy & we r just sitting pouring in Money after money without doing any structural reforms !
 
Desperate times calls for desperate measures. There is no other option left except to privatize the white elephant.
There was a time when PSM was one of the pillars of our economy. so sad to see an important national asset to go away like this.
Fu*k PPPee clan.


Actually changing shareholder structure might be a good thing, on top of new proceeds, that will bring new energy into management.

Say PSM issues new shares in 3 batches to Sinosteel, raising new money of $778m to the company's balance sheet, making Sinosteel a new shareholder of PSM. Financially PSM would be completely on its own feet, it's no longer a taxpayers' responsibility. Also, since Sinosteel is a strategic investor, it will bring a lot of added values to PSM e.g. tech, customers and suppliers in the value chain.

If business goes smoothly, PSM may consider listed in Karachi and bring in public shareholders, not a bad thing for PK's national industry.
 
Actually changing shareholder structure might be a good thing, on top of new proceeds, that will bring new energy into management. Say PSM issues new shares in 3 batches to Sinosteel, raising new money of $778m to the company's balance sheet, making Sinosteel a new shareholder of PSM. Since Sinosteel is a strategic investor, it will bring a lot of added values to PSM.

If business goes smoothly, PSM may consider listed in Karachi and bring in public shareholders, not a bad thing for PK's national industry.

The problem with PSM is obsolete cold-war era machinery which has low efficiency and high break down cost...PSM is essentially worth scrap...

Pakistani government can put steel mills on a right path but only will power is needed. These corrupt politicians are deliberately destroying all strategic institutions. They have their own airlines & steel mills.

Power is not the only problem...you are more of a troll than industrial expert..so you dont know..
 

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