KARACHI: Cash-strapped Pakistan Steel Mills (PSM) and the Government Trading Corporation (GTC) of Iran, have, in principle, agreed to arrange barter trade to make their survival possible, according to officials.Pakistan Steel Mills will import iron ore from Iran against export of wheat to the neighbouring country, said Major General Muhammad Javed (Retd), chief executive officer of Pakistan Steel Mills. It will take around one-to-two months time to start barter trade between the two counties.
As a matter of record, authorities of the two countries are considering holding barter trade after the United States imposed economic sanctions on Iran in June 2012. The sanctions resulted in halt of trade between Pakistan and Iran as banks stopped offering their services (ie, opening letter of credit and making financial transactions) for trade between the two countries.
The CEO said that Pakistan has already agreed to export wheat to Iran and considering importing iron ore in exchange of wheat.
Pakistan would export one million tons wheat to Iran in a years time.
This will include 0.1 million tons wheat export by Pakistan Agriculture Storage and Supply Corporation (Passco), while the remaining 0.9 million tons will be exported after purchasing that from private sector.
He said that it will be depending upon the government of Pakistan as how much iron ore it wants to import in exchange of wheat.
Anyhow, Pakistan Steel Mills needs some 1.4 million tons iron ore in a year to run the mills at breakeven position, he said.
If Pakistan Steel was provided the required quantity of raw material and finances as well than the PSM will be operating at breakeven position of 70 percent capacity utilisation in the next 12-month time.
Anyhow, Pakistan Steel is currently utilising 15 percent of the total installed capacity of 1.1 million tons production per annum, said another official.
He said that the liability of the PSM have piled up to Rs185 billion since July 2008. This included Rs80 million losses and Rs85 billion loans.
Javed said that he has held a number of meetings with secretaries and other officials of the ministry of commerce and the ministry of production and Iranian embassy in Islamabad to speed up the process of barter trade.
Earlier, a four-member delegation of Pakistan Steel Mills visited Iran in December 2012 and held meetings with five companies of Iran to arrange barter trade between the two countries. The delegation was headed by the Pakistan Steel Mills CEO.
A spokesperson for the Mills said that another Iranian company, Iran Central Iron Ore Company, might also consider doing barter trade and exchange iron ore for wheat.
Pakistan is having long-term agreements with Iranian companies to import iron ore from there. US economic sanctions are just hindering import of raw, he added.
By The News International
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