Though steel production is an important sign of industrialization, and was first envisaged by the first Prime Minister, Liaquat Ali Khan, it has been something of an unattainable goal for Pakistan. This is despite the fact that a steel mill was set up after the Bhutto government agreed with the USSR to set one up. That establishment was explored in the latest issue of this newspaper’s Profit magazine. The steel mill was established on a grand scale, but was not able to establish a foothold. One of the solutions was its privatisation, but that was carried out, and then cancelled when the Supreme Court intervened. Since that attempt at the turn of the century, the mill has ceased operations, but has still attracted some recent interest with another attempt to revive the mill. Apart from preparing it for privatization, the mill would help substitute the import of steel products. An integral part of the vision of Zulfikar Ali Bhutto were the Heavy Mechanical Complex and the Heavy Foundry and Forge (which was merged into the HMC in 1990), through which Pakistan was to be propelled into possessing heavy industry.
That vision may not be as vital in this age of artificial intelligence as it once was, but the alternatives offered by Russia show that Pakistan has both iron ore and coal that will go unused unless incorporated into the modernization plans for the mill. There is one proposal for building a blast furnace at a cost of $1.91 billion, which would use local ore, and another for an electric arc furnace at a cost of $1.05 billion. Though much cheaper, it would use imported ore, making the industry vulnerable to external price shock and foreign exchange pressure.
It is best to remember that the Industrial Revolution focused on iron and steel manufacture both in England and in Germany’s Ruhr, accompanied by coal-mining. Countries like Japan have shown that industry can be established without significant ore deposits, but no one has shown that industrialization can be accomplished without steel manufacture. It may be old-fashioned now that other technological developments are taking place, but it is still much needed for raising the country’s industrial base. The option of a blast furnace which will use indigenous ore must be opted for, and the development of indigenous coal will be better than importing coal, as is presently contemplated.
