The Need
In Afghanistan, Steel bars (rebar) and steel products (such as I-beam and C-channel) are also imported almost entirely from Pakistan and Russia. However, Chinese materials have recently begun to enter the market, imported mainly through Pakistan. Transport cost and “time to market” is to be considered a priority concern determining the market potential and thus the scale and product mix of the investment. The price of steel has risen particularly sharply, worldwide cost of raw materials rose by 22%, however, prices in Afghanistan have seen much higher rises, up to 40% in the same period.
The Rationale
The production of Steel and Steel products by Afghanistan National Steel Mills (ANSM) will be for covering domestic market needs, but can also be considered for:
>The regional market of Central Asia, for which competitors face similar or even higher logistical cost.
>These markets, except for Pakistan, have hardly any rerolling capacity, so the plant should market finished products.
>Given a wide spread – due to many uncertainties – the total market gap that opens through growth till 2025 could range from 5 Million Tons to 25 Million Tons.
The prime market for Afghan steel would be regional, apart from Afghanistan, (Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan, and possibly Northern Pakistan).
The Project
Afghanistan has rich sources for the production of Steel and Steel Products but unfortunately there are no quality or considerable Steel manufacturing units in the country. Annual Steel and Steel Products demand is almost 1,500,000 Metric Tons, which is 99% being imported from neighboring countries.
ANSM will begin with the production capacity of 72,600 Metric Tons of Iron bars in the province of Kabul, Afghanistan. Initial Project Capital Cost is well above 12 Million USD. In second phase, the unit for the production of Guarder, T-Iron and Angle iron will be added taking company’s annual production capacity to 140,000 Metric Tons. The Project Cost will be then the reason for an investment above 24 Million USD,on top of that to have sustainable strength it will be 100% equity-based.
The Benefits
The successful installation and operations of ANSM will yield multi-facet benefits to Afghanistan. Just by this 1st unit, ANSM will cover 5% of local Steel and Steel products demand solely on its own. ANSM will become the reason of saving 45-50 Million USD in terms of Foreign Reserves outflow. Afghanistan Government will get almost 4 – 4.5 Million USD on account of Income tax and BRT. ANSM Project will employ at least 400 – 450 workers directly, benefiting a minimum of 2,500 countrymen lives in Afghanistan.