The country”s first and single Direct Reduced Iron (DRI) plant, recently set up with huge foreign investment, is seeking 10 percent customs duty on the import of DRI. Sources told Business Recorder on Tuesday that on the application of Tuwairqi Steel Mills Limited (TSML), a hearing was conducted by National Tariff Commission (NTC) on March 4, 2013 at Islamabad to review the petition for imposition of duty on import of DRI.
The meeting was presided over by NTC Chairman Prince Abbas Khan and attended by TSML Director Project Zaigham Adil Rizvi, representatives of Steel Melters Association Islamabad Chapter, traders, consumers and other stakeholders. During the hearing on behalf of TSML, the director project briefed the meeting through a detailed presentation on TSML project and pleaded for imposition of a 10 percent customs duty on the import of DRI to protect the domestic industry.
He said TSML, owned by Saudi Group Al Tuwairqi Holding (ATH), has been recently set up with an investment of $400 million in steel sector to meet the domestic DRI needs. TSML is a state of the art environment-friendly steel manufacturing project, based on the world”s most advanced DRI technology (gas-based), located at Port Qasim on 220 acres having a designed capacity to produce 1.5 million tons of high-quality DRI per annum, he added.
However, he said that presently there is no duty on the import of DRI and the import being made by the local importers/steel industry at “zero” duty. Presenting the local scenario, the meeting was informed that although TSML”s DRI plant has successfully commissioned, however it may face tough time in the domestic market due to cheap import of DRI from Iran and Oman. Local DRI plant is getting natural gas at higher rates compared to other exporting countries, where gas tariff is some four times lower than Pakistan. The huge and duty-free import of DRI will directly hurt the TSML DRI plant, set up with massive foreign investment, the director project said.
However, during hearing, the domestic steel melter industry opposed the TSML plea, urging the NTC for continuation of current status. Representatives of the steel melters association said presently, local industry has initiated the import of DRI from Iran and Oman for the local consumption and so far a few consignments of DRI have arrived in the country. The cost of production of local industry will increase, if proposed countervailing duty is imposed on its import, which is still on very lower level, they added.
“We believed that there is no need of any import or countervailing duty on import of DRI as its import is limited and not a threat to the domestic industry,” they said and added that presently only some 5,000 tons of DRI has been imported and being used as blender with scrap by the metler industry. Steel melters informed the meeting that presently DRI is being imported at $330 per ton, while TSML price stands at $390 per ton.
Sources said the NTC has asked steel melters and other stakeholder to submit their written point on the issue, after which NTC is likely to take a decision on the case. The government has already granted Export Processing Zone (EPZ) status to TSML, with the option to export 100 percent of its production to Pakistan. In addition, TSML”s DRI will initially be sold in the local market, as well as to India and Malaysia.