1) Infrastructure:
• The machinery of Pakistan Steel has become old and it needs renovation and improvement. Moreover, it the machinery is being run badly in the past years.
• Only 60% of the capacity is being utilized and no steps are being taken for the capacity expansion.
2) Raw Material:
• The basic raw material for the steel melting industries is the steel scrap. The scrap is classified into different categories, by each factory, depending on the quality and use. Scrap of different categories is generally stored in separate piles. Following types of scrap are in common use, in varying proportions, in different factories.
o Pressed Oil & Paint Tins
o Pressed Used Beverage Cans (UBC) o War Scrap
o Ship Breakage Scrap
o Parts of Vehicles and Machines
• Main raw materials of steel industry include steel scrap, fluxes, Ferro alloys and coke, whereas steel scrap is used in abundance in comparison with other constituents.
• About 1,000,000 ton steel scrap in total, inclusive of 400,000 ton scrap imported from countries like Middle East, South Africa, Australia, and Europe, is consumed annually in Pakistan for melting.
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MS billets, steel ingots and other steel scrap form the main raw material for steel re-rolling mills, obtained from Pakistan Steel Mill Karachi and other steel smelters all over the Pakistan.•
Raw materials are being imported from Canada and Australia, which are far away, involving huge freight charges. Other major countries are South Africa, South America and Europe.• PSMC, imports 100% of it iron ore and coal requirements, whereas fluxes are procured locally.
• Contracts with India and Iran have been signed for import of iron ore, which seems convenient and feasible.
• Major sources of supply of coking coal are not available, which is now being imported from Australia.
• The price of domestic steel is dependent on international factors since 75 per cent of our steel demand is met through imports.
• Smuggling of sub-standards raw material
induction in the three tiers started in 2005-06. This includes enrolment as apprentices, Junior Officers based on their diploma and other technical performance, and finally induction as assistant managers in various professional disciplines through an open and transparent system of selection.
• Metallurgical Training Center (MTC) has been undertaken with selection on merit and effective arrangements have been made for on-job-training (OJT).
• Contract with Ukraine, Japan, China, Russia and Iran have been signed for mutual co-operation in training of our engineers.
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Labor agitation over privatization4) Technology
• Innovative process technologies that reduce emissions and wastes (sludges, dusts, CO2) are not implemented.
• Advanced recycling solutions that convert wastes into valuable products are also not available
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There is a paradigm shift in the world steel industries where companies are becoming less and less technology-oriented and more and more “value- enhancement” oriented. This is reflected by the efforts of producers to improve the quality and value of their products as exemplified by the development of new and ultra-high-strength steels .The creation of higher- value steel grades through innovative product development is an important step for maintaining and expanding existing markets, as well as for securing niche markets. Pakistan, however, has been unable to inculcate this shift in its local industry.• There is a lack of management skills and information systems in the industry which if implemented can drastically reduce the cost of production. This cost reduction can be realized through an improvement of business processes (investment strategy, organizational aspects, flexible and just-in-time supply, etc.), partnerships with suppliers and service partners, as well as by the permanent optimization of production routes, equipment and logistics.
• Failing state of Coke Oven Batteries which need immediate reconstruction to produce Coke urgently needed for survival of Blast Furnaces, as well as Billet Mill’s which is dependent on Coke Oven By-Product gases
• Coke-Oven Batteries, Hot Strip Mill and Steel Making Department remained totally ignored because of financial crunch and non-professional approach with which the mill was being run.
5) Utilities:
• Electricity: Electricity is the main, most expensive and most consumed utility in melting industry, with a reported consumption range of 400-1300 kWh per ton of product. About 96-99 % of the total electricity is consumed by the furnace; and rest for other purposes including lighting, overhead crane and motors.
• Water: Major common water uses include the following: o Make-up water for furnace coil water-cooling tower o Cooling of moulds
o Laboratory
o Flue gas scrubbers o Human use
• Fuel Gas: Fuel gas is primarily used, in some units, for preheating the ladle. Gas is utilized, also, to meet some of the household requirements in the factory as well as in the residential accommodations, if located within the premises of the industrial unit.
• Hundreds of steel re-rolling and re-melting mills in Pakistan either owes their very existence or depends heavily on the ship-breaking industry for the supply of ship plates. The small re-rolling mills are worst hit by the non-availability of ship scrap as they entirely depends on ship plate compared to the bigger ones which can afford to use a comparatively more expensive iron billet of the Pakistan Steel. The small re-melting mills are facing a similar situation unlike the big counterparts, which can afford to use iron ingot.
• The ship breaking industry is in crisis due to
1. Increase in international prices of ship scrap 2. High import duty
3. Excessive taxation
The idling of the ship-breaking industry have forced the steel re-rolling and re- melting mills, particularly the big ones, to replace comparatively less costly ship plate by a more expensive Pakistan Steel billet
• Compared to India (who is a net exporter of steel) Pakistan has to import steel in order to meet its local demand.
• PSMC’s entire product mix is sold locally with no export sales.
6) Environmental Issue
Steel melting furnaces:
Steel melting industries are contributing heavily to air pollution. Pollution is generated due to poor quality of scrap bundled.
cadmium but its composition and contents vary with the scrap quality and furnace additives.
Re-rolling mills:
The only environmental related issue is the occasional discharge of black smoke, which emit when the furnaces are run on furnace oil in winter