Você está na página 1de 10
2010 Roadmap to Extracting Punjab Iron Ore and Conversion to Steel Technical and Commercial Strategy
Roadmap to
Extracting Punjab Iron
Ore and Conversion to
Technical and Commercial Strategy
Two very distinct large scale reserves have awaited development for decades in
this province. The projects have not moved beyond early prospecting stage. The
abundant availability of this mineral resource in two separate areas of the
province needs to be first authenticated through a detailed bankable geological
study, followed by development of separate mining strategies for each area. The
scale on which mining is anticipated to be undertaken needs to also be
determined up front because mining strategies - and associated unit extraction
costs - are often scale dependent. Simultaneously, pilot Metallurgical extractive
plants and processes need to be developed and subsequently commercialized on
a fast track.
Projects Directorate,
Punjab Board of Investment & Trade
Copyright ©2010 - Punjab Board of Investment & Trade

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel


This paper is the result of intensive consultations carried out by PBIT across the range of stakeholders, businessmen and technical experts in the field. These strategic conversations commenced in November 2009 and concluded in March 2010 and the complete transcript of proceedings is available with PBIT. In particular, PBIT would like to acknowledge the invaluable contributions from the following members, without whose help, this strategic clarity may not have been achieved.

1. Mr Fazal Abbas Maken, Secretary, Commerce & Investment, Government of Punjab

2. Mr. Saif Ullah Chattha, Secretary, Department of Mines & Minerals, Government of Punjab

3. Mr. S. Ishtiaq Hussain, Manager, Department of Mines & Minerals, Government of Punjab

4. Mr. Muhammad Aslam, Manager, Department of Mines & Minerals, Government of Punjab

5. Mr. Nadeem Babar, Chairman, Punjab Chief Minister’s Task force on Energy

6. Mr. Illyas Cheema, Former Director, NESCOM

7. Dr. Waheed Butt, Chemical Engineering Consultant

8. Mr. Mian Aziz ur Rehman Chan, MNA and Chairman, Rehman Steel Furnace (Pvt.) Lahore

9. Mr. Rehman Aziz Chan, Director, Rehman Steel Furnace (Pvt.) Lahore

10. Mr. M. Y. Baig, CEO, IFC

11. Mr. Hammad Baig, Director, IFC

12. Mr. Muhmmad Nasim Riaz, Consultant, IMC

13. Mr. Javed Mughal, Chairman, Mughal Steel

14. Mr. Shakeel Ahmed, General Manager, Mughal Steel

15. Mr. Ahmed Hussain, Chairman, Batala Steel

16. Mr. Tariq Sail, Country Head, Representative of Canadian Investors

17. Mr. Waqqas Asif, Hijveri Construction Company

18. Mr. Malik Anis Akbar, Chairman, Meridian Marketing

19. Mr. Asad Jaleel, Director General, EME (Pvt) Ltd

20. Mr. Sarwar Alam, Director Projects, EME (Pvt) Ltd

21. Mr. Zahoor Ahmed, Director General, Ittefaq Sons (Pvt) Ltd

22. Mr. Ali Akhtar, Principal Consultant, Metallurgicon and Member BoD Al Tawarqi Steel

23. Mr. Javed Ahmad, CEO, RDC International

24. Dr. Muhammad A. Qazi, Executive Director, PCSIR Lahore

25. Mr. Mahmood Akhtar, Group Director, Nishat Group

Lahore 25. Mr. Mahmood Akhtar, Group Director, Nishat Group Moazzam Husain Director General – Projects Development

Moazzam Husain Director General – Projects Development Punjab Board of Investment & Trade 23 – Aikman Road, GOR I- Lahore moazzam.husain@pbit.gop.pk

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel


T here are 2 large iron ore reserves located in Punjab. The two have very different geological characteristics. One located in Chichali, near Kalabagh which is low grade iron ore is a surface deposit and other located in Chiniot/ Rajoa which is high grade iron ore

under alluvial cover. Given the very different mineralogical compositions and mining conditions of each, a different development roadmap is proposed for each.


T his deposit is estimated around 500 million tons of low grade iron ore (Fe content 34%) and efforts to develop it are almost as old as Pakistan itself. Initial tests conducted on Chichali iron ore and carried out in USA, Germany and Sweden suggested this ore type is

not amenable to physical beneficiation. This was probably because the ore is in fact chemically (as opposed to mechanically) combined with silica and poses a metallurgical challenge.

The Krupp-Renn process, a direct reduction process was developed in Germany during the 1930’s. By the end of World War II, 38 kilns with an annual capacity of 1 m tons were in operation in several countries. In 1956, PIDC, in consultation with Krupp proposed a Steel Mill based on Chiciali iron ore with a production capacity of 50-70,000 tons of billets to be located at Piran Ghaib near Multan. The proposal was shot down by the Planning Board (predecessor to the Planning Commission) on the grounds that the Krupp - Renn process was not industrially sound and feasible and the scheme was not economically viable.

In 1959, the Government retained the services of J.C Austen of the World Bank to chart out a roadmap to develop the Chichiali reserves. His output, led to investigations being assigned to M/S Kellog of USA. Kellog also maintained at the time, that the ore was not suitable for direct reduction and in fact was averse to the Krupp-Renn process.

Between 1961 - 63, geological studies sponsored by the United Nations Special Aid Fund confirmed the following deposits:

1. 250 m tons of uniform quality iron ore in one block on both sides of Chichali pass

2. 150 m tons in Kutch, Ghughlan and Makerwal mines

Encouraged by this finding, in November 1964, a pilot plant trial was carried out on 1500 tonnes of Chichali iron ore after blending it with high grade imported ore. It was conducted by the Institute de Recherches de la Sierrugi Francaise (IRSID) at a conventional blast furnace at Ougree near Liege, Belgium. The trial suggested this ore could be beneficiated through the Acid Blast Furnace Process. This was further confirmed by a full scale industrial test on 15,000 tons

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

Chichali iron ore at Salzgitter, West Germany in June 1966, which according to international experts was a complete success. As a result of this breakthrough, in August 1967 a German company reportedly offered to set up Kalabagh Steel Mill of over 0.8 million tonnes per year (mtpy) capacity based on Kalabagh iron ore and imported coal at a then estimated cost of Rs. 1.542 billion (including foreign exchange cost of Rs. 878 million). It is claimed that some European banks also offered loans for this project and that PIDC selected a site with about 80% raw materials available within 11 miles but unfortunately, this project was also shelved.

In April 1968, President Ayub Khan accepted an offer from Premier Kosygin of USSR, during his visit to Pakistan, for the Kalabagh Steel Mill project. Within a month an agreement was signed between PIDC and M/s Tiajpromexport of Moscow. Subsequently, it transpired that Russia did not have the technology, and could not develop a feasibility to produce steel from the Kalabagh iron ore. Instead of reviving the German offers based on local raw materials, the project was converted into a coastal plant design and transferred to Karachi. Pakistan Steel was established with comparatively inferior machinery and based on imported iron ore and coal. Chichiali iron ore reserves were forgotton.


I n the aftermath of the Oil shock of 1974, both extraction technologies and energy economics have both travelled a long way. Today presents a new paradigm from the time when earlier engineering efforts were made on Chichiali ore. In the view of present day

experts, Chichiali ore would require a 2 stage process: 1) Beneficiation (enrichment) of iron ore and 2) smelting in a blast furnace. Extraction and utilization of silica would be another by product/ activity. Accordingly, this roadmap envisages an onsite mouth of mine beneficiation plant. It will produce beneficiated iron ore for use in integrated steel mills.

We propose to materialize this initiative in stages. In terms of specific action steps:

1. Punjab Mineral Development Corporation (PUNJMIN) will be asked to assist in providing drilling/ excavation services to obtain fresh samples of iron ore. The area and excavation will be selected in conjunction with a panel of mining and geological experts from University of Engineering and Technology (UET), Lahore, with whom, preliminary discussions have been held.

2. These














3. Based on these findings, an appropriate metallurgical process and technology will be developed leading to the design of an extractive metallurgical pilot plant. The plant and the extraction process need to be engineered simultaneously and tailored to cater to

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

the mineralogical composition of Chichali iron ore. The basic process of beneficiation is physical separation and chemical sintering. Its output is ready-mix charge.

4. On a parallel track, a full blown study will need to be urgently undertaken to re authenticate the reserves and recommend an appropriate, large scale mining methodology. In this, all existing available data will be re examined so that minimal additional drilling and excavation is required. UET has mining, metallurgical and geological engineers. PUNJMIN has the machinery for drilling. Working under the overall supervision of an International geological/ mining consulting company, these three may be asked to develop a scope of work/ working plan and TOR’s for this scoping study and then implement this at minimum cost and in the shortest possible time.

5. Finally a feasibility study for commercial production will be prepared.

The project would doubtless require R & D funding, even if at a modest level. While we propose to generate a donor/ grant assistance request for this we also recommend Punjab government funds be mobilized for immediate implementation so that the studies, pilot project implementation and commercial feasibility study can be completed within 12 months from the date the funds are earmarked.

A detailed GANTT chart will be designed in consultation with the experts mentioned in the

acknowledgements section, once the nod on funds availability for pilot plant has been received.


T he successful pilot will be commercialized and in all probability will require the local ore to be blended with high grade imported ore in some proportion. Based on this newly designed process and a bankable study of the reserves, a 1.5m T steel mill in Kalabagh is


Location: Mouth of Mine – Minehead. Water availability, gas, energy, labor access, transport and infrastructure.

Size: Minimum 1.5m MT

Energy: Approx. 200 MW pulverized coal based captive power plant at mouth of mine located

at Makarwal, 20-30 km from beneficiation plant.

Water: Available

Products/ Byproducts: Beneficiated iron ore. Direct reduced iron (DRI), Pig Iron, Steel, slag cement, tar etc.

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

Infrastructure: This is a capital intensive integrated continuous process plant, 24 x 7, round the year. As such highly skilled manpower such as technicians, engineers and labour will be required and a custom housing colony will need to be developed. The area is already well connected with roads. In addition a railway track to the nearest railhead will be laid so Kalabagh Steel Mills freight wagons can operate under Pakistan Railway’s open track policy.

HR Planning: The top tier HR would doubtless need to be brought in from the international and local market on competitive market based salaries. In terms of skilled and technical manpower, TEVTA would be requested to design an ongoing curriculum with high degree of practical training at existing steel plants or at a pilot facility located within one of these institutes.


I n the 1970’s, OGDC conducted an aeromagnetic survey over the pre Cambrian shield area near Sargodha – Chiniot. Subsequently, in 1989 the Geological Survey of Pakistan (GSP) discovered iron ore deposits near Chiniot, in district Jhang after conducting a geophysical

survey. Eleven years later, in 1999-2000, PUNJMIN commissioned RDS consultants to carry out a detailed exploration over a small area in which 14 boreholes were dug. Each borehole struck iron ore at depths between 120 – 160 m below the surface. According to the assessment of this

survey, and extrapolations and inferences there from, the following reserves were indicated.

12m MT proven

110m MT estimated

500m MT anticipated

The ore body itself is of the following dimensions:

Length (along-strike)

700 meters


200 meters

Depth (along dip)

330-400 meters

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

Based on extrapolation, the study concluded 110 m iron ore reserves at a depth of up to 460 m with mineralogical composition as follows:


Ore Type

Fe 2 O 3 %

Reserves (Million Tonnes)

Smelting Grade Ore




High Grade Ore

Hematite + Magnetite



Medium Grade Ore




Low Grade Ore

Hematite + Magnetite



Low Grade Ore in Sulphide Zone







The study however stopped short of developing or recommending a mining strategy.

20.717   Total 109.83 The study however stopped short of developing or recommending a mining strategy.

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

The Geology of the Indian Shield Zone

Pre-Cambrian basement rocks are considered important source rocks for metalliferous ore deposits all over the world. The Sargodha- Chiniot-Shahkot-Sangla hill belt constitutes the northern outcrops of the Indian shield zone.

The Kirana area spreading over Sargodha-Chiniot comprises of two geomorphic features: scattered hills and flat alluvial plains.

The scattered hills represent meta sedimentary rocks i.e. quartzite, slates, tuff etc, and igneous rocks i.e. rhyolite, andesite and sills/dykes of basaltic composition

The Kirana Range starts from Sargodha and travels east passing

Chenab Nagar, Rajoa, Sangla Hills &

Shahkot. From here it goes the

earth’s surface & crosses the localities of Hafizabad, Sheikhpura, Lahore & before entering India

where it makes its exposure once again at Hyderabad Deccan.

These basement rocks are of magmatic origin and contain economical proved deposits of Noble/ Precious Elements, like Gold, Silver, Platinium, Copper & tungsten.

However, because the iron quality is good (hematite), it has high ferrous content and is therefore of smelting grade, commercial exploitation appears feasible. A detailed techno- economic feasibility study for the wider area (from the earlier PUNJMIN study) must now be undertaken to re authenticate the reserves. The study must also recommend an appropriate, large scale mining methodology. In this, all existing available data will be re examined so that minimal additional drilling and excavation is required.

This is a mega mining project. The challenge is to

tap the reserve bed which is located beneath a 70- 170m alluvial overburden and a water bed. A

good reference to follow for a technical solution is

the Oilsands project in Alberta Canada. This is a

similarly challenging project and based on a

methodology termed strip mining from top down

and mining is in progress in full swing.


T o drive this forward one step further, mining samples need to be obtained and a pilot plant set up on immediate basis so

that an economical extractive metallurgical process can be devised for commercial production.

A private steelmaker/ fabricator has proposed to

build a pilot plant based on the new ITmK3 technology. This initiative is being encouraged by PBIT and the Department of Mines and Minerals.

The ITmK3 process uses a rotary hearth furnace in

which fine iron ore is reduced using pulverized

coal. It requires less energy, low capital and O &

M costs. Recently, in Minnesota, a pilot

demonstration plant of 25,000 tons per year capacity cost $ 16m to build and has completed successful trials. A 500,000 ton Commercial

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

plant is estimated to cost $ 150m. In this way the investment works out to US $ 300 per ton of installed capacity.

Similarly UET will also be asked to design a technology and build a pilot plant to make steel from Chiniot Iron ore. In both cases PUNJMIN will be asked to provide sample of the ore which these pilot plants at UET and the private one will convert to steel.

Additionally, samples will be sent to relevant institutes in China and Malaysia with a request to help identify the most appropriate technology for conversion to steel. These recommendations together with results of the above pilot plant would help identify the most appropriate and economic technology for the conversion process.


K arachi based Pakistan Steel and Al Tawarqi are also immediate potential buyers of this high grade ore. In addition, Punjab’s series of induction and electric arc furnaces have shown interest and willingness to invest in modifying their furnaces to utilize the

indigenous ore (together with a proportion of scrap) instead of pure scrap as at present. One

such process is the oxy cup process that utilizes 10-30% scrap and 70-90% iron ore. Finally there

is an international market for iron




U ET has mining, metallurgical and geological engineers. PCSIR has testing and design facilities. PUNJMIN has the

PCSIR has testing and design facilities. PUNJMIN has the machinery for drilling. Working under the overall

machinery for drilling. Working under the overall supervision of an international geological/ mining consulting company, the three should sit together and develop a scope of work/ working plan and TOR’s for this scoping study which will be completed at minimal cost.

Pakistan Steel Mill will be encouraged to develop a suitable technology, in collaboration with the PCSIR and other research laboratories, to utilize

Roadmap to Extracting Punjab Iron Ore and Conversion to Steel

local iron ore. This can even be done in a “win -win” partnership collaboration Government once an appropriat e transaction structure is mutually worked out.

with the Punjab


S teelmaking is a ba sic industry, and its prima ry


ANNUAL STEEL PRODUCTION M T 2008 600 500.312 500 400 300 200 100 57.791 53.625
South Kor ea
Million Metric Tons
*Source: World
Steel Association




available in Pakistan. Had the se

reserves been developed a fe w decades earlier, Pakistan tod ay may well have been a midd le income country with a small er

population and a larger industri ial base. Now this roadmap has be en prepared in consultation with t he leading government and priva te experts and businessm en

t he


acknowledgement earlier. I ts

implementation by the Punj ab


noticeably improving prosperity , increasing industrial competitiveness, and gre ater self reliance

and exports.

Government will lead