.Metallurgy at its best


Jan 19 - 25, 2004





French equivalent of Metallurgy is metallurgie, Japanese would say Yakingaku, in Italian there is no match found probably they call it as "Metal cuisine". Baba-e-Urdu would say Dhatiat and in Persian its Ahansazi, in Latin the closes is Scientia ferreus. So tick your pick Le choix est votre (the choice is yours).

I got hooked to this field as this was the only discipline that was left for "Left over's" in the Engineering college and I had no other choice. Probably things have not changed since then, now the teachers outnumber students. Also there is a paradigm shift with students having a say in making of examination papers and to some extent in marks allocation so as to make things transparent.

The leadership in steel world changes so often as the Captain in our cricket team. First it was America, with its steel giants Bethelem Steel, Indiana Steel, Alloy steel producer Carpenter steel and et al.. The wonder child in American steel makers is known by the name of Nucor. It was responsible for producing "Thin Slab" which can be rolled into plates at a very low cost. A technology which has revolutionized the whole world of steel making and plate rolling and is equivalent of man landing on the moon.

Nucor has now come with another new idea of Castrip. Strip is thin sheets. Castrip involves the direct casting of strip from liquid steel. Motor lamination sheet has been produced and sent to India, also stainless steel sheets have been produced. The total capacity of this plant is 125,000 tonnes. Nucor has plans to license this technology to other steel plants in the world.

In the good old days Pennsylvania was the hub of steel making in America. The steel workers were so well paid that any father would like to get his daughter married to a steel worker. In fact some doctors changed their profession to steel so as to make a fast buck.

The best institutions in field of Metallurgy were in USA namely School of Mines and Metallurgy, Rolla, Missouri, Colorado School of Metallurgy, Carnegie Mellon, Ohio state university etc.

The biggest tragedy with the American Steel mills was that they were too slow for innovations, using outdated technology like open hearth process for steel making and casting ingots, instead of modern version of making steel through converters where molten hot metal also called pig iron is blown with oxygen from the top and nitrogen from bottom. And then cast through continuous casters. Energy consumption parameters were not efficient.


The amazing success of Japanese in world steel dynamics after World War II can be attributed to technological development in Metallurgical practices and going in for better management strategies. In their new steel mills one can find large blast furnaces with ten thousand tons of pig iron production per day about five times bigger than what we have in our iron making plant.

The fuel rate which means consumption of coke per ton of pig iron produced is as low as 480 kg has been possible by good blending of iron ores bought by Japanese from all over the world at most economical prices and process control using oxygen enrichment in blast of air going inside the blast furnace. The ores are selected using special software where one has to put in only chemical composition of iron ores and other input material along with their costs the programme would run and give most economical selection of iron ores.

For cutting down the cost of transportation very large vessels having more than seventy thousand tons capacity are used. The handling system is very fast and storage is done in special designed stock yards, operating at minimum stock levels. The approach is coined as Just in Time inventory management.

The steel making which is made by converting molten pig iron through oxygen blowing from the top in specially designed converters. The converters are again of giant size about 250 tons per heat or batch, almost double then what we have here.

In order to cater to requirement of steel sheets used in car body's rolling mills equipped with latest technology which control thickness variation and shape controls are used.

Management practices: When we talk of management, new approaches like Quality circles, Kaizen, Benchmarking and strategy management makes the new principles of Management. In addition American like Dr. Edward Deming who with his 14-point prescription become Japanese Guru. Some of his points to ponder are:

Learn the new philosophy.

Teach and Institute leadership.

Drive out fear, create Trust, and Create climate for Innovation.

Encourage Education and Self improvement for every one. Another aspect of Dr. Deming was his advocacy of statistical tools, and education.


Benchmarking is measuring performance against that of best-in-class organizations, determining how best in class achieve those performance levels, and using the information as the basis for goals, strategies, and implementation. Japanese are famous for their benchmarking style (watch their eyes and lips), major American steel companies and British Steel have been benchmarked for betterment, creating a great steel empire.

What made Japanese super steel power is their deal on strategic management. You will find them always conducting situational analysis using SWOT analysis to examine strength and weakness in the internal environment as well as the opportunity and threat in the external environment. This helps them to build on strengths, overcome weakness and threats and take advantage of opportunities.



Formulation of strategy was done in most of the steel plants at corporate level to set overall direction for the organization. Then their strong focus is on business-level strategy guiding the strategies of each strategic business unit. Then setting functional strategies for marketing, operations, human resources, research and development, finance and information resources. At corporate level there were lot of action in terms of vertical integration of suppliers, distributors etc.

In horizontal integration diversification of products, mergers like JKK merging with Kawasaki steels, and joint ventures with organizations outside Japan. To some extent they are using retrenchment strategy by cutting workforce and closing non-profitable units.

Steel Mills which have a name and fame includes Nippon Steel, Kobe Steel, Kawasaki etc. In September, Japan's NKK Corp. and Kawasaki Steel Corp. merged to form one of the world's largest steel producing entities.


In the steel world Chinese occupies special position, (dragon), one of its largest steel plant Baoshan Iron & Steel Co. which builds the core of Shanghai Baosteel Group Corporation, is currently negotiating with Japan's Nippon Steel Corp. on incorporating the latter into the building of the one mill aimed at the car market.

The plant would cost approximately $1 billion, with Nippon Steel perhaps financing as much as 40% of the new equity for the new joint venture. The plant would produce an annual 1.8 million metric tons of cold-rolled steel sheet and 450,000 tons of surface-processed steel sheets for cars. Construction is to begin 2003 and operations to commence by 2005.

The Chinese car market is booming. The October statistics show that throughput rose 82% over the same January-October period last year, and auto sales rose 50% up until October of this year over last year, with nearly 1 million units sold. A booming car market needs high-quality steel, and the new plant would alleviate some of the supply shortage with the galvanization of cold-rolled steel sheets. Roughly a quarter of the equipment used in the industry is not up to international standards and thus cannot produce the products needed.

China became the world's largest maker of steel by 1996, and now the country has reached an annual output of nearly 150 million tons. To quench demand for the production of increasingly sophisticated steel products, however, more high quality steel will be needed in the future.

The Chinese government hopes to become increasingly self-sufficient in the future, boosting the degree to which domestic demand is covered by domestic production to 95% by 2005, and the Baoshan project is a step in the right direction. Symptomatic of the lack of high quality products is the fact that more than 20 million tons of steel were imported between January and October of this year, up a whopping 55.4% year-on-year.

Apart from the first $1 billion steel mill that would feed Shanghai's emerging motor city Baoshan also plans on a second mill that it would build on its own, producing 1.4 million tons of heavy gauge steel needed in ship manufacturing.


With rapid increase in automobile market and allied industry the demand of steel has increased substantially. Statistics shows that out of total requirement of steel about 4.5 million tones only one-third is produced locally from Steel Mills, some quantity is met from non-organized sector and Ship breaking and the remaining is imported. There is strong need for expansion. Pakistan Steel can economically expand to 3.5 million tones using latest technology especially in cold rolling mills the product of which can be used in car industry. Presently car bodies are being made of imported cold rolled sheets.

For not that special end use, steel from ship plates can serve the purpose. Pakistan leads the world in ship breaking, presently one of the biggest ship in the world is being broken in Somaini beach near Karachi. In terms of managing the steel sector taking cue from biggest steel mill in the country the only pronounced strategy practiced is retrenchment strategy. Other areas of Strategic management still need to be implemented.

Analyzing success stories of some of the major steel plants in the world one finds leadership at CEO level using corporate level strategies of vertical and horizontal integration, mergers plus retrenchment strategy as their main target. Plus energy savings, zero defect level approach.

In terms of entrepreneurship we find here a very dynamic climate one can find small industries in places like Shershah, Lawrence road in Karachi making parts for motor cycles and cars. Same is the position in Lahore where metallurgy runs in veins. Pipe Mills are running to utmost of their capacity making small size to large diameter pipes used for oil and gas transportation. Producing reinforcement steel bars is a thriving market by re-rollers.

For future looking for joint ventures with Turkish, Iranian and Indians would be a promising option. Time has come to forge steel links and built a giant steel mill in export processing zone of Karachi with Muslim countries joining hand making wide steel plates for building ship etc and rails manufacturing.

There is need to have SAARC chapter on Iron & Steel Industries already there is lot of informal connections with Indians, about ten furnaces are being installed in Lahore under Indian experts guidance. Why not make it formal.

Also with better management strategies calling for mergers of Pakistan Steel Mill with Heavy Mechanical Complex and Special Steel Plant in Karachi will give positive dividend.Would people who matter in Islamabad act, they better do it fast. Time is running out.