A Chinese firm is carrying out feasibility study on the quality of iron ore in Chichali, Kalabgah, to ascertain that deposits are enough to commission a steel mill. Official sources in the petroleum and natural resources ministry told Business Recorder on Monday that the study would be completed in three phases in two years time.
The Phse-I would evaluate economic viability of the project while in the Phase-II, laboratory test would be carried out, the sources said, adding in the Phase-III, the mines would be dug to extract about 1,500 tons iron per day.
The Planning Commission has already approved Rs 126.20 million for carrying out feasibility study of iron-ore in Chichali for commissioning of the Kalabagh Steel Mill.
The approved amount includes Rs 84 million foreign exchange component (FEC). The ministry has utilised Rs 14.5 million till June 2006 while Rs 50 million would be spent during 2006-07 on feasibility study.
Under the directives of the prime minister, the ministry is currently updating a study for the commissioning of the steel mill at iron-ore in Kalabagh, which was originally carried out in 1967, sources said.
The previous study had shown 32 percent content of iron whereas ore containing 55 percent iron was required for the commissioning of a steel mill. The deposits of iron ore in Chichali have been estimated to be over 200 million tonnes.
Pakistan imports two million tonnes of iron ore annually mainly for consumption by the Pakistan Steel Mills. According to previous survey report, the Kalabagh iron ore is the biggest, located in Chichali.
This would be the second steel mill in the public sector after the Pakistan Steel Mills in Karachi, which was commissioned with the technical support of the then-Soviet Union. Since a Chinese firm has been engaged to carry out the feasibility study, it is most likely that Pakistan would seek Chinese assistance in commissioning the steel mill at Chichali.