GPH Ispat is going big, in the true sense, from November.
When its Tk2,500 crore state-of-the-art quantum technology plant in Chattogram – the first in Asia and second in the world – comes into production, the GPH will triple its market share in steel and increase production fivefold.
And that is all when the country's private sector seems to be going through a dull period.
The GPH has reasons to go for such drastic capacity increase. It feels that Bangladesh's steel demand – still the lowest in the world on a per capita basis – will go up in future as more and more mega projects come on stream.
And with the Quantum Arc Furnace technology – a highly power conservative and high combustible method first used in a plant in Mexico – it wants to drastically reduce impurity in steel to produce high quality metal that will last long with more strength.
The plant constructed in Sitakunda of Chattogram is expected to generate around 10,000 employments when its furnaces blow hot.
The Primetals Technologies Limited, one of the largest technology companies based in Germany, will provide the solution to the GPH allowing the company to produce steel with less than 1 percent impurity in line with the international standard.
Currently, all steel manufacturers including the existing plant of the GPH produce steel with a minimum of 6 percent impurity.
The United Arab Emirates and China have also started to set up steel plants using the same technology.
The steel industry is considered highly hazardous to health across the world, but the quantum technology will enable the plant to be green by minimising carbon emission and using a zero-discharge water management plant.
As part of this international standard steel plant, the company has set up an air separation unit which is the largest at this moment in the country. The unit will be used to separate nitrogen, hydrogen and oxygen from the air to be sold in the market in liquid form.
The air separation unit is capable of producing 99.9 percent pure oxygen.
Under the quantum technology, the scrap will be melted by arc electric furnace, a high energy consumption technology that will help the company minimise its carbon emission. The carbon emission will be 10 milligram per 1000 litre air, which is far lower than the World Bank's requirement of 50 milligram. Currently, all steel manufacturers in the country use induction furnaces.
The construction of the new GPH Ispat plant – which started three years back on 60 acres of land – is more than 90 percent complete. The entire production process is automated and less human touch is required.
The production of the plant will take the market share of the GPH in the steel industry to around 10 percent from the existing 3 to 4 percent. Currently, the BSRM is the leading steel manufacturer with market share above 10 percent.
Presently, steel production of the company is around 1.50 lakh tonnes per annum and the inclusion of the extended plant will add 8.5 lakh tonnes more in production. The mass production is expected to increase GPH's annual turnover to
Tk8,000 crore from the existing Tk5,000 crore within three years of production.
This is the largest investment by a single group in the past five years beyond power sector. The Chattogram-based steel manufacturer collected 50 percent of the total financing from foreign sources to reduce funding costs and Tk560 crore was taken from local banks – mostly state-owned banks at 9 percent interest rate.
The GPH Ispat secured the rest of the financing from its own sources, according to the company.
The steel industry has a huge opportunity to grow in the future as Bangladesh is lagging behind in steel consumption compared to other Asian countries, said Mohammed Jahangir Alam, chairman of the GPH Group.
Currently, per capita of steel consumption in Bangladesh is 30kg to 35kg when in India it is 80-90kg and in China it is 450kg, according to industry estimation.
The consumption is still low because our country did not see much infrastructure previously, he said. The implementation of mega projects amid economic development will increase the steel consumption in the future, he said.
"As a result, the demand of quality steel will also rise," he added.
At present, no steel manufacturers are exporting steel because of the rising domestic consumption, he said.
Moreover, there is a lack of export quality in steel production. The use of the latest technology in steel production will enable the GPH Ispat to produce export quality steel, he opined.
"The high quality product will cost consumers a bit more, but the GPH will try to keep the price affordable by minimising gas and electricity consumption using better technology," said Mohammed Almas Shimul, additional managing director of the GPH Ispat.
Referring to the collapse of Rana Plaza building, he said the disaster occurred only because of the use of poor quality steel. "So, such incidents raised awareness among people about using quality steel," he added.
He said the company emphasised on green steel production plant by minimising carbon emission and establishing a water recycling plant. The plant will use surface and rain water. The company has already set up a rain water harvesting plant.
Share market status
The GPH Ispat is a listed company with the Dhaka Stock Exchange. Despite mega investment in the company, its share price remained downward and has been trading at around Tk30 each, lowest in the past one year.
Almas Shimul explained that the mega investment did not have impact on the share price because production is yet to start, but the number of shares increased after issuing the right share.
The net profit of the company increased by nearly 13 percent to Tk64.35 crore in the past year, according to the Dhaka Stock Exchange.