Bashundhara’s ambitious steel plant set for production by mid-2026

Bashundhara Multi Steel Industries (BMSIL), which has set a target to establish the world's largest single-strand mini mill project for long steel products, is expected to commence operations by mid-next year, at the National Special Economic Zone in Mirsarai of Chattogram, according to company officials.

They say BMSIL will be the first in Bangladesh to produce rebar coil and wire rods. Furthermore, modern, environmentally friendly technology will be used in steel production, reducing the cost per tonne of rod by approximately Tk3,000 compared to conventional methods, while ensuring consistent quality and ultimately benefiting buyers.

"With an annual production capacity of 1.25 million tonnes, we have already completed over half of the site's development," Mohammad Mazedul Islam, head of project at BMSIL, told TBS while this correspondent visited the special economic zone, formerly named Bangabandhu Sheikh Mujib Shilpa Nagar — the country's largest economic zone — recently.

He further said, "Using world-renowned Italian technology from Danieli's MIDA®-Q, an endless casting and rolling process known for its energy efficiency, environmental friendliness, and competitiveness, we will introduce rebar coil and wire rod to Bangladesh for the first time.

"Additionally, the production of wire rod will serve as an import substitute, saving the country approximately $250 million (equivalent to Tk3,000 crore) in foreign currency."

The initial estimated cost of the project, being built on 70 acres of land, was Tk3,700 crore. However, due to local currency devaluation, the cost is now expected to rise to approximately Tk4,700 crore. Once fully operational, the project is expected to directly employ over 3,000 workers.

A jetty is also planned for construction on the Sandwip Channel near the project site to facilitate the transportation of raw materials for steel production. However, this implementation initiative has yet to commence. Additionally, construction of the factory's infrastructure is ongoing.

Why new investment in steel

Bashundhara's steel manufacturing venture in Manikganj during the early 2000s proved unsuccessful, with officials citing an unsuitable location. After a gap of more than 20 years, the company is now making a substantial reinvestment in steel, particularly given the current political climate and its impact on development-driven steel demand.

Mazedul Islam explained, "Per capita steel consumption in Bangladesh remains low compared to neighbouring countries, including India. However, with the growing economy, we anticipate continuous increases in demand. Keeping this in mind, we are making this investment."

He continued, "Currently, per capita steel consumption in Bangladesh is approximately 55kg, which is expected to rise to 95kg by 2030. In contrast, the current per capita steel consumption in India, Japan, and the USA is 93.4 kg, 432.5 kg, and 266.3 kg, respectively. This gives us optimism for future growth."

According to BMSIL, Bangladesh's steel production grew by approximately 64% over six years, from 2018 to 2023, reaching 90 lakh tonnes. However, production still falls short of demand by 8 lakh tonnes.

Financing challenges and consignment delays

Officials have raised concerns regarding financing difficulties and shipment delays at the port. They said banks are not providing financing as committed, leading to consignments being stuck at the port. Additionally, Bangladesh Economic Zone Authority (Beza) has yet to provide essential utilities, such as gas and water, despite prior commitments.

Due to currency devaluation, banks have reached their single-borrower exposure limits, but approvals from the Bangladesh Bank have not yet been granted.

The officials said although Tk2,305 crore was initially sanctioned as a syndicated loan from eight banks, only Tk540 crore has been disbursed so far, adding financial pressure to the company. Additionally, due to currency devaluation, an extra Tk1,000 crore will be required until the project launches.

The company has requested an increase in the syndicated term loan by Tk447 crore.

"The delay in fund disbursement is hampering project implementation," said Mazedul.

According to the company, currently, consignments worth Tk200 crore are stuck at the port, incurring daily port and container demurrage charges, which have accumulated over Tk100 crore. This is mainly due to banks not releasing the necessary shipping documents due to wrongly tagging with the sister concerns of Bashundhara Group while BMSIL is being set up under a different management."

BMSIL has secured approval for 3 mmscfd of natural gas from Karnaphuli Gas Distribution Company, with a gas receiving station already established within the Bashundhara premises inside the zone. Additionally, permissions for a 6MLD raw water supply and 200MW power have been granted by Beza and the Bangladesh Rural Electrification Board, respectively.

The company has already spent Tk252 crore on power transmission lines.

The officials say concerns remain over whether the full supply of utilities will be available on time when the plant begins operations, raising uncertainty about the project's timeline and efficiency.

When contacted, Abdullah Al Mahmud Faruk, project director of the National Special Economic Zone, could not provide an immediate solution.