KARACHI: The future of Pakistan’s largest steel making organization, Pakistan Steel Mills (PSM) is at the stake of closure due to shortage of raw material, financial and production crisis.
All the efforts of government were ended in vain to save the sinking ship of PSM, various bailout packages worth billions of rupees besides one-go rescue plan for the revitalization of PSM to set it a profitable organization are in doldrums.
Today PSM’s liabilities have accumulated to over Rs 100 billion and are still rising day by day. The PSM was running in nominal profit in 2001 to 2008 and after this period the national identity started going into losses even being injected Rs 43.1 billion during 2009-13, but actually these were commercial loans with mark-up.
At current market prices the cost of imported materials amounts to $465 per tonne of steel. PSM currently sell steel at $575 per tonne. So their gross margin defined as raw materials minus selling price is $110. And this money has to cover all other expenses such as labour, capital, power, overheads, depreciation etc. All other costs amount to $370 per tonne. So the real cost of producing the steel is $450 plus $370, which is $820 per tonne. We can import the stuff at the current world price of $540 per tonne.
PSM have been facing the loss of Rs. 90 million per day and labor union considers current government responsible for the closure of PSM by saying that “ government paving the way to privatize PSM by declaring it bankrupt.
Chairman of CBA Union, Shamshad Qureshi informed that the second blast furnace steel mills have closed.