Dynamic Investment Planning (Routledge Revivals) by Dore Mohammed H.;

Author:Dore, Mohammed H.; [Dore, M. H. I.]
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2015-08-15T00:00:00+00:00

In terms of crude steel demand, this is equivalent to about 78,000 MTPY, and the report recommended that an integrated iron and steel plant be deferred until crude steel demand rises to 120,000 MTPY. It added that at the current rate of growth of demand (assumed to be 4.5 per cent p.a.) the target demand would not be reached before 1985.

The report’s financial projections were based on capital and operating costs and loan terms offered by suppliers. It was on strict commercial profitability criteria that the project was considered unviable. It conceded that further analysis ‘to incorporate socioeconomic factors’ was necessary. This was done by Williams and Young [57] applying a social cost benefit framework to Bechtel’s financial projects, which merely confirmed Bechtel’s recommendations. The Zambian Cabinet shelved the project in 1971.

In August 1973, ENERGOPROJEKT, of Yugoslavia, produced their ‘Feasibility Study for an Integrated Steelworks in Zambia’ [43]. (The Energoprojekt Report does not state when the work was commissioned.)

This Report relied on a market study carried out by Mindeco,19 although a section of Mindeco disagreed with this market study which they considered overestimated the demand for steel and called for yet another market study.20 The first will be called the Mindeco Study. The second was carried out jointly by Indeco and Mindeco and so it will be referred to as the Indeco-Mindeco Study [45].

The Mindeco study began with a questionnaire sent out to 63 steel-using firms of which only 18 (or about 29 per cent) furnished the required information.21 However, the study claimed that even this was an improvement over simple import statistics which, it was alleged, understated imports. Thus on the basis of the information gathered from the firms, it estimated demand (imports) for 1972 to be 162,103 MT. On examining the commodity composition of this study, it is clear that this figure is based on the SITC category 67 only, whereas it seems that at least SITC nos. 691 to 694 should be included. A later memorandum suggested that the true figure was probably in the 150,000–180,000 MT range. It should be noted that this is an estimate of finished steel and is equivalent to about 220,000 MT of crude steel.

The Indeco-Mindeco study was undertaken because it was argued that in the years 1970 and 1971 there had been some stockpiling of steel and that it was necessary to establish ‘normal’ annual consumption. It attempted to do this by producing a very detailed list of steel products by size and type. But the list itself was confined to what might be called ‘standard stock items’ by steel merchants. For instance, the list does not include any structural steelwork or iron and steel for bridgework. But the report does provide very useful information for the (proposed) mill on the exact sizes and shapes of steel products that should be rolled for immediate delivery to the market.

The study arrives at a total of 119,000 MT of finished products for 1972, and allows a 7 per cent p.a. growth, giving a figure of 136,000 MT of finished products for 1974.

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