Informally shut down Pakistan Steel Mills (PSM) Board of Directors (BoD) has reportedly allowed the management to hire the services of M/s Concord Industrial Project Limited, Ukraine till November 21, 2013 for preservation of coke oven battery -1 (COB-1) at a total cost of $0.4 million inclusive of 15 per cent withholding tax.
At a recent meeting, the Board was given brief history of the CoB-1 and the necessity of preserving the battery. The re-construction of the CoB-1 amounted to Rs 1.5 billion in 2010; if it was not preserved the refractory will cave in and re-construction will entail an amount of Rs 2.5 billion to Rs 3 billion requiring three years for re-construction.
Regarding procurement of raw material from local and foreign companies, the Board was informed that Pakistan Steel has been procuring iron ore through spot tenders on C&F and duty delivered basis due to difficulties for opening of L/Cs from Iranian companies with a long-term contract with Pakistan Steel against 6th generation: from M/s Ehya Sepahan for which there is a valid contract up to 30th June, 2014 and M/s ICIOC whose long term contract expired on 30th June, 2013. More so, the finalisation of 7th generation long term contracts (05 years) is still pending.
PSM management argued that in order to maintain the supply of iron ore procurement had been made through spot tender on C&F basis and DDP (FOR) basis and as a result iron ore available in the stock which is sufficient for more than three to four months.
According to the management, PSM has other arrangements for procurement of iron ore like: A, (i) valid contract till 30th June, 2014 with M/s Ehya Sepahan for 350,000 MT iron ore; (ii) spot contract in which one case did not materialise due to lack of funds; B, LoI’s issued but contract not signed due to: (i) disagreement in clauses in one case; and(ii) lack of funds in two cases; and C, tender opened in two cases without further progress due to lack of funds.
The Board was further informed that Pakistan Steel has got valid long term contracts of coking coal with one Canadian and three Australian firms of various quantities and durations. All the four firms have extended validity of contract upto 31st December, 2014.
The last shipment of 55,000 MT was received from Australia on 30th June, 2013. The stock of coking coal has been extremely low and bed layers after scrapping are being recovered to keep the battery alive. Due to lack of funds further procurement process is halted, however efforts are being made by the BMD to procure coking coal on DPP basis.
