Board meeting of TSML in DammamJanuary 27, 2015
KARACHI: The Board Meeting of Tuwairqi Steel Mills Limited (TSML) was held on 27th of January in Dammam. An update was given to the Board Members about the current financial crunch TSML is in.
It was noted, with an extreme level of concern, that the pending matter of the Feedstock Tariff of Natural Gas for the DRI Plant of TSML, has not yet been addressed and resolved by the GOP.
In the EOGM of the Shareholders, held on 25th& 26th of November 2014, in Islamabad, a Resolution was passed that the Shareholders would wait for another ECC meeting to be held. Otherwise, they shall be left with no option but to EXIT from Pakistan, both Al-Tuwairqi& POSCO.
The Board Members observed that after the EOGM, few ECC meetings have been convened. But the matter of TSML, to be discussed and addressed, on the basis of 3rd Summary sent to the Cabinet Division by the Ministry of Industries on the 20th of November, 2014, could not come on the Agenda. And this evidently, establishes that the matter is not on that level of priority, as it is for the Shareholders and the Board Members of TSML.
Under the circumstances, the Board decided to proceed ahead with the decision, earlier taken by the Shareholders (through a Resolution) to Lay-off its employees. Feelings were expressed, that the untoward situation prevailing is as lamentable as explicable. But TSML is left with no other choice.
Specific reference was made and tribute paid to the extraordinary team of the professionals, developed in the process of setting-up of this Plant. Truly, a team of ‘winners’. As the performance of the DRI Plant of TSML was declared and certified par-excellence, by the OEM’s themselves. The plant is in shut down mode since September 2013 for commercial reasons.
It was unambiguously expressed that from the end of the Shareholders of TSML, the first Press Release on the subject was formally given to the print / electronic media on 26th of November, 2014. And now, this is the second Press Release on the matter, based on the decision of the TSML’s Board.
TSML is a Joint-Venture Project of POSCO of South Korea and Al-Tuwairqi Group of Saudi Arabia. The investment on the ongoing operation of the DRI Plant is to the tune of US$ 340 million. While another US$ 890 million was in the offing, as its forward & backward integration, subject to the condition that the ongoing operation is not bleeding.
The factor responsible for the non-competitiveness of its product was the non-application of Feedstock Tariff of Natural Gas, assured initially by the GOP, in an effort to provide a level- playing field. Fully mindful of the ground realities, TSML had agreed to have this special tariff only for a period of five years. And in lieu thereof, offered 15% equity (free of payment) to the GOP, as Preferred Stock, with Preferred Dividend and guaranteed buy-back after 10 years, at the break-up value.
TSML, on completion of its integration, was envisioned to be the largest fully integrated steel complex in Pakistan, with a capacity of 1.5 MTPA. Aiming to bring a revolution in the revival of the steel sector in particular and industry as a whole.
The pertinent most, was the participation of the world renowned steel producer POSCO in this project, with a commitment to invest further for its forward & backward integration under the concept of the transfer of cutting-edge technology of steel making, POSCO owns.