Bangladesh To Sell Largest Steel Mill

Bangladesh is looking for potential buyers for its largest steel mill, the state-owned Chittagong Steel Mills Ltd (CSM), company officials said yesterday. The company is facing closure due to persistent losses, they said.

The CSM is virtually closed now, after the government withdrew the subsidy two years back, said one official who declined to be identified.

But officials said the companys huge debt discouraged potential buyers, some of whom were from South Korea and India.

The government has been looking for buyers for the mills under its privatisation policy. But no one came to buy it at a nominal price of 4.0 billion taka ($86.4 million) plus liability, the official said. The company currently has bank liability of 7.0 billion taka ($151.2 million). Officials said that liability is rising by another 600 million taka ($13 million) annually on interest payments.

 

They said the company was running on worn, obsolete machinery and had registered profit only in 12 years of its past 30 years of operation. (Reuters)

Company officials blamed low productivity due to labour unrest, mismanagement and excess manpower for the poor state of the mill, whose annual capacity is 300,000 tonnes of steel ingot, billets, plates and corrugated iron sheets.

On the other hand, the labour unions accuse the government of poor corporate policy and corruption. Its still a gold mine. A slight change in government policy may turn it into a viable project, one labour leader said.

Union leaders, who are opposed to privatisation, said the government had not maintained the mill properly by replacing outdated machinery. They said some 2,000 workers faced an uncertain future due to closure of the company. The government has deliberately withdrawn the subsidy to let the CSM die a natural death, said another union leader.

Union leaders said the government could still make CSM a profitable company if it spent some 80 million taka ($1.72 million) on upgrading machinery. There is a great demand for CSM products in the market for their better quality, said Mohammad Ishaque Mia, a steel-product dealer.