api

THE SALT SECTOR

Analysis of Pakistan Industries (Report)SUBMITTED TO: KHADIJA BARI

DATE: 8th MARCH, 2010

SUBMITTED BY:

SHAFI MOHAMMAD AKHUND

WALEED WASTI

RAFI-UD-DIN SHAH

YUMNA HALIM KHAN

SARAH ZUBAIR

ACKNOWLEDGEMNT

We are entirely thankful to our course instructor Dr. Khadija Bari who gave us a chance to formulate an extensive report on a particular sector of Pakistan and we had an opportunity to investigate the Salt Industry of Pakistan. We also appreciate her kind advices and help throughout the course of our report formulation.

Secondly we are thankful to Mr. Ismail Suttar (CEO-HUB PAK) who despite his busy schedule took out some of his precious time for us and gave us a thorough insight into the sector and took a personal interest in the formulation of the report.

It would never have been possible to for us to successfully compile this report without the help of the above two.

EXECUTIVE SUMMARY

The report is a thorough insight into the salt sector of Pakistan. It tells us about the uses of salt and how important it is for us. It briefs us on both the domestic and industrial uses of salt clearing the misconception that salt is mostly used for household use. The Major sources of salt in Pakistan are also mentioned including the Major Rock Salt mines. The Resource Based View (RBV) model is then explained along with the explanation regarding its application to the slat sector analysis.

Pakistan Economy is also explained briefly with its History, Policies, Structure, Foreign Investment, Income distribution and other industrial statistics. Pakistan is the only nation bestowed with the 3 types of naturally available salt- Lake salt, Sea/Solar Salt, and Rock Salt. The sources of all three types of salt in Pakistan are mentioned and also the extraction process of each type of slat is explained in detail. Some issues with salt mining are also discussed. The VRIN which is a part of the RBV model is also applied specifically to further analyze the sector.

The main element of the empirical research is the Interview with the CEO of HUB PAK, Mr. Ismail Suttar which is discussed in detail. The major part of the interview includes the discussion regarding the overall sector, the discussion of the 3 types of salt produced in Pakistan, their local and international mining processes, the world market mechanism of Salt and the sector wise consumption of salt. Also discussed are some problems related to the sector that were highlighted in the interview, the role of government and some of the recommendations given by Mr. Ismail Suttar.

PAKISTAN’S ECONOMY

Pakistan is the 27th largest economy of the world in terms of purchasing power and 45th in dollar terms. Previously Pakistan was an agro based economy but industrialization has shifted it to more of a balanced economy. This industrialization along with agriculture includes textile, food, chemical sectors. Pakistan’s economy was badly affected in the previous years due to many ongoing factors including the political instability, foreign economical pressure and the never ending conflicts with India. However, the economy has come out of a great set back in the last decade as a result of different economic policies, notably privatization of banking sector. The reason for a rapid upsurge in the economy is due to the reform policies made during Musharraf’s regime in 2000. Inflation is one of the major threats to the economy. It has risen from 7.9%-9% in the years 2005-2006. Also, in 2008, due to the increase in petrol prices, Pakistan’s economy has gone as high as 25%. As a result of which the central bank is working on tightening the monetary policy while trying to preserve the growth.

History:

At the time of independence, in 1947, agriculture was the backbone of Pakistan’s economy. Despite being a newly formed poor country, Pakistan’s economic growth rates have been higher than the world’s average growth rates. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. However, Pakistan’s average growth rate fell to 4.6% in 1990s due to numerous factors, notably political instability. As stated earlier, industrialization gave a new look to Pakistan’s economy in the initial years of its independence. During 60s, Pakistan was amongst the much talked about nations with respect to its fast growing economy. Being seen as the role model, many nations tried to copy the economic strategy of Pakistan, one of them was South Korea. After that, the two wars with India, separation of Bangladesh struck the economy hard. However, it was brought up by nationalization in 70s, later followed by deregulation and increase in foreign aid in 80s. But this significant growth didn’t foster for a longer period and due to mishandling of the economic policies and weak planning the economy began to grow on a slower pace in 1990s. Since then the economy has gone through many down turns factors including financial crisis in Asia, Global recession, Economic sanctions and post 9/11 incidences. However, despite these adverse effects the economy continued to grow with the help of IMF, World Bank and the ADB.

Macroeconomic Reform:

According to several sources, Pakistani Government has worked hard on its reforms and prospects; most notably in reducing poverty and bringing in employment chances. Nawaz Sharif’s era brought the concept of liberalization, which has yielded benefits for the export in Pakistan’s textile sector; also the country is looking forward for getting free trade benefits from the agriculture unit as well. Pakistan, having low labor cost and economies of scale is at the

advantage and can replace China as the largest textile exporter in the long run. Growing stability in the nation's monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation. The effect of oil price shock in 2004-2005 was comparatively elastic in Pakistan due to the consumption of CNG by a great number of people. But now unlike other countries Pakistan is moving away from the import driven principle which many countries used in the twentieth century, and is pursuing more of an export driven economic model that is used by many South East Asian countries, notably China. In 2005, the World Bank reported that

"Pakistan was the top reformer in the region and the number 10 reformer globally —

making it easier to start a business, reducing the cost to register property, increasing

penalties for violating corporate governance rules, and replacing a requirement to

license every shipment with two-year duration licenses for traders.

In terms of doing business, World Bank has rated Pakistan 85th among 181 countries of the world, and stands at the top in South Asia, ahead of China, Russia and India. This is only possible due to the incentives given to the technological companies by the Government of Pakistan to do business in the country.

Due to the economic crisis worldwide, Pakistan also became a victim of balance in payment crisis. IMF bailed it out then, and in July last year increased the loan to $11.3 billion from an initial $7.6 billion. Since 2008, Pakistan’s economic outlook is reported to be very sluggish. One of the main factors of this economic torpor is War on terror, which has led to the decline of FDI to $3.5bn, straight off from $8bn. Along with terrorism, high global prices, trade deficits, high inflation and crash in the value of rupee has contributed to this decline in the economic condition of Pakistan. According to credit agency Moody’s Investors Service, Pakistan’s stability on debt has gone to negative and it reported political uncertainty as one of the major factors. The cost of protection against a default in Pakistan’s sovereign debt trades at 1,800 basis points, which shows that the investors believe that the country is either in or will soon, be in default.

Economic Comparison of Pakistan 1999-2008

Indicator 1999 2007 2008 2009

GDP $ 75 billion $ 160 billion $ 170 billion $ 185 billion

GDP Purchasing Power Parity (PPP)

$ 270 billion $ 475.5 billion $ 504 billion $ 545.6 billion

GDP per Capita Income $ 450 $ 925 $1085 $1250

Revenue collection Rs. 305 billion Rs. 708 billion Rs. 990 billion Rs. 1.05 trillion

Foreign reserves $ 1.96 billion $ 16.4 billion $ 8.89 billion $ 14 billion

Exports $ 7.5 billion $ 18.5 billion $ 19.22 billion $ 18.45 billion

Textile Exports $ 5.5 billion $ 11.2 billion - -

KHI stock exchange (100-Index)

$ 5 billion at 700 points

$ 75 billion at 14,000 points

$ 46 billion at 9,300 points

$ 26.5 billion at 9,000 points

Foreign Direct Investment $ 1 billion $ 8.4 billion $ 5.19 billion $ 4.6 billion

External Debt & Liabilities

$ 39 billion $ 40.17 billion $ 45.9 billion $ 50.1 billion

Poverty level 34% 24% - -

Literacy rate 45% 53% - -

Development programs Rs. 80 billion Rs. 520 billion Rs. 549.7 billion Rs. 621 billion

Stock Market:

In the initial four years 21st century, Pakistan’s KSE100 Index was declared as the best performing stock market index of the world by Business Week. The capitalization of Pakistan’s listed companies was $5,937mn in 2005, however due to uncertainty in the political environment, elections, inflation and accounts deficit, the corporate sector of Pakistan has decline rapidly and so has the KSE.

Population:

It is stated by Former Governor of State Bank of Pakistan, Dr. Ishrat Hussain that according to the purchasing power, 30 million of Pakistan’s population is middle class. Standard Charter estimates that this chunk of population earns on an average of $10,000 per year. As of 2010, the upper and upper middle class are growing on a very fast pace. In 2002, it was estimated at 6.8 million and has now risen to approximately 17 million with comparatively higher standards of living and high per capita income. The poverty has gone down to 10% since 2001. Pakistan government spent over Rs.1 trillion (on poverty alleviation programs during the past four years, reducing poverty from 35 % in 2000-01 to 24% in 2006.

Demographics:

The population is around 168 million, and is growing at the rate of 1.80%. Approximately 49% of the individuals are literate, and life expectancy on an average is 64years. Per capita income of $3000 makes Pakistan a medium income country in the eyes of World Bank.

Tourism:

Karachi and Lahore are the major tourists’ attraction cities. Besides that Northern parts of Pakistan have always served the tourists with their beauty and are very authentic in showing the natural beauty of this country and grab tourists’ attention.

Currency:

The national currency of Pakistan is Rupee. Till 1982 it was pegged to US Dollar, then in Zia’s regime it was changed to manage float, and was considered as probably the best decision of Zia. Pakistani currency has depreciated against the US Dollar. When Pakistan’s account surplus pushed the currency up, the central bank stabilized it by lowering the interest rates and buying dollars, to preserve country’s export competitiveness. Today Rs.80 makes up to a Dollar in real terms. Shaukat Aziz’s tenure is worth mentioning while talking about the economy, as by 2007 October, as Foreign Reserves were incremented to $16.4 billion. Pakistan's trade deficit was at $13 billion, exports grew to $18 billion, revenue generation increased to become $13 billion and the country attracted foreign investment of $8.4 billion. However, October 11th’s 2008 reports by State Bank shows that the foreign exchange reserves had incredibly gone down by $571.9mn to $7749.7mn.

Sectoral contribution to GDP GrowthMost of the recent acceleration in GDP growth has come from the industrial and service sectors.

GDP growth by sector, as a percentage of GDP

Sector 2001-02 2002-03 2003-04 2004-05

Agriculture 0.03 1.01 0.53 1.74

Industry— Manufacturing

0.61 1.71

1.08 1.11

2.74 2.31

2.46 2.19

Service 2.47 2.75 3.16 4.16

Real GDP (fc) 3.1% 4.8% 6.4% 8.4%

Source: Economic Survey of Pakistan 2005

Structure:

Pakistan’s economy is suffering from inflation, which is well above 26%. As mentioned earlier, initially agriculture accounted for most of Pakistan’s economy, approximately 53%. However, due to many policies that came over time agriculture now only contributes to one fifth of the overall economy. The recent figures show how agriculture has been out placed by many industries (such as apparel, textiles and cement) and services (such as telecommunications, transportation, advertising, and finance).

Sectors:

Agriculture:

Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. Zarai Taraqiati Bank Limited is the largest financial institution which is helping in the development of this sector. Pakistan is capable of growing; chickpea, apricot, cotton, rice, wheat, sugarcane, onion, date palm, mangoes and oranges.

Industry:

Pakistan’s industrial sector accounts for 24% of the GDP which consists of around 40% of the labor force. Cotton textile production and apparel manufacturing are one of the largest working industries of Pakistan. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing. Beginning with the textile industry, which is one of the largest industries of Pakistan. It is dominated by Punjab, however it provides employment to other provinces equally. 3% of United States imports regarding clothing and other form of textiles is covered by Pakistan. Besides textile, the Auto industry in Pakistan has also emerged over time. It is contributing approximately to 2.7% of the total GDP which is expected to go up to 5.8% in the coming years. Being one of the populated countries of the world, the CNG consumption gives a good platform to CNG Industry as well. Pakistan, today have more than 2900 CNG stations which has given employment to around 50,000 people in Pakistan. Cement Industry of Pakistan is also contributing to the industrial growth of the country.

Currently, the sector comprises of 27 plants and is contribution above Rs.30 billion in the form of taxes. In the last 3-4 years, another sector that has emerged as the backbone of Pakistan’s economy is IT. Currently, it comprises of 1306 companies of about $2.8 billion. Since Pakistan is filled with raw materials, their exploration has given mining sector an unusual importance. The major production of this sector is of coal, rock salt and other industrial and construction minerals. Today the mineral sector is contributing 0.5% to the GDP and is likely to increase considerably.

Services:

The services sector contributes to 53.3% of the overall GDP. This includes 24% of transportation, storage, communication, finance and advertising, and 30% of the whole sale and retail trade. In the communication service sector, mobile phones have exploded the markets. We have more than 91million mobile users in Pakistan, which is one of the highest mobile tele-densities in the world. In addition to the cellular networks, there are over 6 million landlines with fiber optics all around the country. Besides the telephonic users, Pakistan has around 17million internet users. All the working organizations of the country now have internet connection and have their own websites. This sector has provided employment to 80,000 individuals directly, and 50,000 indirectly. Railway sector is also one of the service sectors that should be looked upon, one of the greatest reasons for that is to promote tourism. A new rail link trial has been established from Islamabad to Teharan to Istanbul. Aviation is also as important as railway. It consists of private airlines as well that are of great significance in improving the overall outlook of the sector. Besides these sectors, finance and insurance sector is one the largest growing sectors of the country. Pakistan has been ranked 34 out of 52 countries in the World Economic Forum's first Financial Development Report. The banking sector has been profitable since 2002. This may be due to the credit card market which has recently grown strong and achieved over $1million sales. The Federal Bureau of Statistics has registered this sector’s growth over 166% since 2000. The ownership property sector has expanded 23folds since 2001, especially in metropolitan cities like Karachi and Lahore. The main factor of this is urbanization, as the people are coming to the cities to earn their livelihood. Still there is a huge shortfall in the sector that cannot be met by the government alone. The FBS registers over 49% growth in this sector. Electricity is also one of the important sectors of any nation. Currently, Pakistan is facing problems in terms of load shedding and inadequate supply of electricity. The country is making efforts to preserve energy to make electricity and it is claimed by the Minister of Water and Power Development that Pakistan will be self-sufficient by 2011, in terms of electricity generation.

Foreign Investment:

Pakistan today is one of the investment friendly nations of the world. Doing business in Pakistan has become comparatively easier since 1999, due to the removal of many barriers. Foreign investors do not face restrictions in capital inflow and investing 100% equity to most of the

sectors. Pakistan is ranked number 20th in the world in terms of attracting private sectors towards itself. This is only possible due to the introduction of economic reforms in 2003 that guaranteed foreign investors that the nation will be stable and will be able to send back the invested funds in the coming future. Tariffs have been also reduced to 16%, with the maximum of 25% excluding the car industry. One of the main reasons of this rapid expansion in every sector is due to privatization that was introduced in 1990s, and today many banks are privately owned.

Foreign Mergers:

As the economy is growing rapidly foreign investors are actually taking interest in the corporate sector of Pakistan. The well known mergers in the country today are PICIC, PTCL, PakTel, Prime Commercial Bank, Union Bank and Lakson Tobacco Company.

Foreign Trade:

Pakistan is a member of World Trade Organization. It has also bilateral and multilateral trade agreements with many nations and international organizations. The variability in its trade deficit is due to political instability, impact of adverse weather conditions and most notably the fluctuation in the demand of its export goods. Cotton textile and apparel industry has dominated the exports of Pakistan, however the main imports are petroleum and its products, edible oil, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products. Despite the fact that the country has the account surplus in imports and exports we still have large merchandise trade deficit. One of the reasons for this trade deficit is the increase imports of the earthquake (October 2005) relief items. Pakistan’s exports have increased from $.7.5 billion in 1999 to $18 billion in 2008. Country’s major exports are rice, wheat, furniture, cement, milk, chicken, meat, carpets and rugs, electrical appliances, marble, leather goods, sports goods (especially soccer balls), surgical instruments etc. Pakistan’s imports have stood up from $28.58 billion to $30 billion. Its single largest import is petroleum and its products. Other imports include industrial machinery, construction machinery, trucks, automobiles, computers, computer parts, toys, medicines, pharmaceutical products, food items, defense equipment, iron, steel, electronics, civilian aircraft, and other consumer items.

Foreign Aid and Remittances:

Pakistan receives long term loans from IMF, WB and ADB. It also receives bilateral aid from the oil rich countries. IMF has provided loan to the country to improve and country’s economy and bring stability. Friends of Pakistan had pledged $1.6 billion in aid, so that Pakistan can be self sufficient in the near future. The foreign remittances have played an important role in Pakistan’s economy. Pakistani workers in the oil rich Arab states have brought billions of remittances to the

country. The countries that are the major source of remittances to Pakistan are USA, UK, UAE, Japan, GCC countries, Saudi Arabia, Australia, Canada and some EU countries. These remittances count for about 4% of the overall GDP.

Income Distribution:

Gini Index: 41

Household income or consumption by percentage share:

lowest 10%: 4.1%

highest 10%: 27.7% (1996)

lowest 20% : 27.7% (2006)

The sector we have selected to analyze in terms of global competitiveness and in perspective of

Pakistan Industries is the Salt sector. One may say that we don’t have much of competitive edge

in this sector but we as a group feel that there is enough potential in this sector and Pakistan can

become a leading export nation in the coming future if right steps are taken at the right time.

Importance of Salt

Salt is essential to human life and the functioning of the human body, which is why we could

never live without it. This is also why in the days of antiquity, salt could be worth more than

gold, since you can't preserve meats with gold, but could easily do so with salt. This was of

extreme importance in the days when we lived without refrigeration and modern preservatives.

Without salt, most dishes do not taste that great. Salt adds flavor that is essential to all meals that

are not sweet. Salt is also an important nutrient and a very versatile ingredient. Salt can be used

not only to give flavor to food, but also in skin care, tasks around the house and to preserve food.

Salt's formal name is sodium chloride, and it has been used since antiquity. The sodium

contained in salt is an essential nutrient that allows an organism to maintain its ionic balance and

to retain water to keep hydrated. Without salt we would dehydrate.

There are several types of salt's and their flavors and colors can vary but their characteristics are

similar.

Eating salt

Salt plays an important role in our body and that is why it is necessary to consume 1500

milligrams daily. Salt helps to regulate the volume of blood and blood pressure. 1500 milligrams

of salt is actually a very little amount, and most people consume much more than this daily.

The abuse of the salt is common since most of the processed food products we purchase already

have salt added to them, and many people add even more salt at mealtime to those products. The

foods with the highest contents of salt are processed foods, those with cheeses, fast food,

sausages and pickles are among the many foods rich in salt.

Many people feel that foods taste better with salt or large quantities of salt, but it is only because

their taste buds have grown accustomed to this taste. Therefore, it is difficult to avoid the abuse

of salt but it is important to control its consumption.

To reduce salt consumption, you can try replacing it with other flavors. Among these are: lemon,

herbs, vinegar or spices. Over time the taste buds become accustomed to the new flavors and

they will not miss the flavor of all the excess salt once consumed.

Why we should consume salt.

If we consume the amount recommended by experts in nutrition, salt is vital for our health and

well being. It facilitates digestion, helps maintain the correct level of body fluids, allows the

transmission of nerve impulses, enables muscle activity and the proper absorption of potassium,

and offsets the losses of water caused by excessive sweating, diarrhea and vomiting.

Is salt fattening?

Salt does not add calories to food or liquids and therefore is not fattening. What is certain is that

by contributing to the retention of liquids this increases the volume and weight of the body.

Drinking enough water helps with the elimination of excess salt. By being careful about the

amount of salt we add to foods and beverages and what salt is already in them, we can enjoy this

essential mineral that is so important for the human body.

Industrial Uses of Salt

Salt is all around us. Many, even most, of the products we see are produced from salt or using

salt in their manufacture.

Industries use most of the salt produced in the world today. The biggest single use of salt is also

one of the least known. Salt is the feedstock for the chlor-alkali chemical industry, just as oil is

for the petrochemical industry. The difference: we are not running out of salt! Chlorine

chemistry brings consumers clean water, soaps and detergents, many medications, PVC pipes for

our homes, cell phones, cosmetics, protective suits for SCUBA divers – and astronauts, digital

cameras, flat panel TVs, electron microscopes, and solar panels for energy production. The list is

essentially endless. Manufacturing textiles, glass, rubber, leather, even drilling oil wells, depends

on salt. Salt has 14,000 known uses.

Other industrial uses of salt

It would be difficult to list all of the thousands of industries that use salt as a raw material or

ingredient. The major industries include:

Textile and dyeing: Salt is used to fix dyes and to standardize dye batches

Metal processing, such as aluminum refining: Salt is used to remove impurities

Rubber manufacturing: Salt separates the rubber from latex

Oil and gas drilling: Salt is used to produce a drilling mud that prevents widening of bore holes

in rock salt strata, inhibits fermentation, and increases mud density

Pharmaceuticals: Salt is used for tablet and caplet polishing, the production of intravenous

saline solutions and for manufacturing hemodialysis solutions used for kidney machines

Animal hide processing and leather tanning: Salt is used to cure, preserve, and tan hides

Pigment manufacture: Salt is a grinding agent

Ceramics manufacture: Salt acts to vitrify heated clays

Soap making: Salt separates glycerol from water

Detergent production: Salt is used as filler.

Just a few of salt’s other industrial uses include:

Windows, lenses and prisms and in high power laser systems (sodium chloride)

In molten salt reactors to produce and separate transuranic elements (sodium chloride)

In molten salt incineration of high explosives, propellants, and pyrotechnics (sodium

chloride)

In salt bath furnaces for a number of heat treatment applications such as: austenitizing,

mar tempering, neutral hardening, tempering nitriding, carburizing, and dip brazing

(sodium chloride)

To generate electricity in salinity gradient solar ponds (sodium chloride)

As an antifreeze agent in geothermal heating and cooling (sodium chloride)

To combat greenhouse gases by sequestering industrial carbon/carbon dioxide

underground (sodium chloride)

And salt mines host experiments in physics and astrophysics that require precise

conditions for accurate measurement (sodium chloride)

Commercial Uses of Salt

In our homes, salt makes food delicious … and so much more. In fact, there are more than

14,000 uses of salt, many of which involve helping us with our household tasks. Many "old" uses

are still valid today and a lot cheaper than using more sophisticated products.

Here are some of the fascinating applications of salt:

The most familiar use of salt undoubtedly is in the kitchen and on the dining table. Salt accents

the flavor of meat, brings out individuality of vegetables, puts "oomph" into bland starches,

deepens the flavor of delicate desserts and develops flavor of melons and certain other fruits. No

other seasoning has yet been found that can satisfactorily take the place of salt. But there are

other uses around the home, too. Salt is an excellent cleaning agent, by itself or in combination

with other substances. A solution of salt and turpentine restores the whiteness to yellowed

enameled bathtubs and lavatories. A paste of salt and vinegar cleans tarnished brass or copper.

Pour strong brine poured down the kitchen sink to prevent grease from collecting and eliminate

odors. Salt helps destroy moths and drives away ants. A dash of salt in laundry starch keeps the

iron from sticking and gives linen and fine cottons a glossy, like-new finish. A thin paste of salt

and salad oil removes white marks caused by hot dishes or water from wooden tables. A box of

salt is an important item in many bathrooms. In mild solutions, it makes an excellent mouthwash,

throat gargle or eye-wash; it is an effective dentifrice; it is an effective antiseptic; and it can be

extremely helpful as a massage element to improve complexion. Salt tiles are also used for the

construction of spa and also "sculptors" of all ages can enjoy easy and inexpensive salt dough.

Sources of Salt in Pakistan

Pakistan obtains salt from two sources, they are:

1. Rock Salt reserves in the mountains.

2. Solar salt or marine salt or salt obtained from the sea.

Pakistan has the largest reserves of rock salt in the world, and they are as follows:

KHEWRA SALT MINES

Situated at the foothills of the Salt Range, Khewra Salt Mines are the oldest in the salt mining

history of the sub-continent. Salt occurs in the form of an irregular dome like structure. There are

seven thick salt seams with cumulative thickness of about 150 meters. At places rock salt is 99%

pure. Salt is transparent, white, pink, reddish to beef-color red. In certain horizons it is

crystalline. Inside the mine there are beautiful alternate bands of red and white color salt. There

are 18 working levels. Cumulative length of all drivages is more than 40 km

Location 160km south of Islamabad

Leased area 3,398.53 acres

Geological Horizon Pre-Cambrian

Commercial salt Average 96%

Shades of salt White, Pink and Red

Mining method Room and Pillar

Rock Salt Resources 6.687 Billion Tons

Production (2006-07) 465,657 tons

WARCHA SALT MINES:

Warcha salt Mines are located 276km from Islamabad. The salt occurs in the form of an irregular

and broken salt dome. Its white salt is well demanded by the manufacturers of kitchen-flow salt.

The pure white salt is transparent and crystalline.

Location 276km south of Islamabad

Leased Area (Two) 3,601.17 acres


Commercial salt Average 98%

Shades of salt Generally white and pink

Mining method Room and Pillar

Total Resources Over one Billion tons


KALABAGH SALT MINES

Kalabagh Salt Mines are located on the bank of the Indus River. Salt is excavated by Room and

Pillar method. Some of the chambers are more than 80 meters deep where the salt is still mined

manually. There are 13 different kinds of salt seams with different shades of color. Actual old

mines are located near the village known as Wanda Kukranwala.

Location 296km from Islamabad or

50km from Mianwali

Leased Area

(Two Leases)3,837.81 acres


Purity of Salt (NaCl) Average 96%

Shades of salt White and Pink

Rock Salt Resources Over One Billion tons


Jatta/Bahadurkheil Salt Mines:

Location217km from Islamabad or

35 km from Kohat

Leased Area 8,449.92 acres

Geological Horizon Tertiary (?)

Purity of salt (NaCl) Average 92%

Shades of salt white, light to dark grey

Total Resources Over few Billion tons


Salt is majorly used by:

1. The chemical industry.

2. The leather Industry.

3. As Table salt by households.

Apart from the indigenous use, rock salt also contributes to the exports of Pakistan.

The export figures are:

Description 2003-2004(000) 2004-2005(000) RS

Sodium Chloride and

Common Salt

49725150 176255

Currently Salt is being exported to India, China, Afghanistan, USA, Australia and Newzealand.

However Kenya, Japan, Malaysia, Singapore and South Korea are also our potential customers.

The products exported to these countries include:

1. Edible salt.

2. Salt for animals

3. Salt for health care and beauty.

The current contribution of mineral sector to the GDP is about 0.5% and likely to increase

considerably in the future if certain steps are taken.

The model we have selected for our research of the salt sector based on competitiveness is the

Resource-Based View (RBV Model).

Key Aspects of RBV

Resource Based View is an economic tool that is used to determine the sources that are available

to a firm and how to use them in order to find a competitive edge in that field. As it has been

discussed earlier that in order to sustain long term compatibility a firm must make sure that the

resources are not homogenous and constant; these properties would lead the product’s tendency

to be imitated or substituted by another firm that eventually creates a barrier for the competitors.

The key points that are discussed in RBV are that to begin with a firm must find potential

resources that can give the firm an edge. After determining the resources the firm needs to go

through the (VRIN) criteria and evaluate accordingly. The VRIN criterion is described as

follows:

Valuable: A resource can be valuable by either cutting its drawbacks or by outperforming

the competitor’s production. The major consideration over here for any firm must be that

the operational cost associated with the value-creating resource must not exceed the

discounted returns that are expected from it in the foreseeable future.

Rare: The rarity of a resource makes it valuable as well. So any resource that is rare

naturally has great value, because it is not found everywhere.

In-imitable: If the availability of the resource is restricted to one firm only then it can

become a source of competitive advantage, by enhancing the resource to the level that it

cannot be imitated easily by any of the competitors. There is an underlying factor of

inimitability-the causal ambiguity, which occurs if the source from which a firm’s

competitive advantage stems is unknown.

Non-substitutable: Another important factor that a resource must carry within itself is its

tendency to be non substitutable. A resource may be rare and in imitable, but it would be

of no use if the competitors bring an alternative; and it wouldn’t give any economic

profits in the long run.

The characteristics that are mentioned above are very important in the attainment of competitive

edge over any competitor and thus the existence of these features in any of the resource makes it

more sustainable. The model highlights certain phrases that need to be understood before we

begin our actual research.

What constitutes a “resource”?

“Firm resources include all assets, capabilities, organizational processes, firm attributes,

information, knowledge, etc; controlled by a firm that enable the firm to conceive of and

implement strategies that improve its efficiency and effectiveness.”

And secondly;

What constitutes “competitive advantage?”

The competitive advantage can be attained only when the strategy that is being used for the

resource is value creating and is not been implemented by any of the competitors.

The model further talks about creating barriers for resource imitation that can be done by

“isolating mechanism”, that can be reflected in corporate culture, information unevenness,

managerial capabilities and property rights. The other factor that was mentioned earlier was

“casual ambiguity” that may cause sustainable competitive advantages. This casual ambiguity

can be a result of tacitness, specificity, and complexity in firm’s resources, which may ultimately

raise barriers to imitation. These aspects would also be discussed in detail in the later chapters.

All and all competitive advantage can only be achieved in an environment where competition

does not exist. A firm can be called strong in a true sense if and only if it does not let its rivalries

to perform in a similar manner as they do. But once both the firms (entrants) come on the same

level, the strong competition begins and competitive advantage becomes inefficient. So firms

need to continue its efforts to look forward for the VRIN approach in order to enjoy long term

sustainability and competitive edge.

Despite the fact that the model is widely used there are certain drawbacks that come alongside

with the model.

It is very difficult to find a specific resource that would satisfy the VRIN criterion.

It has limited perspective limitations.

How will we apply RBV in the analysis of Salt sector?

As is mentioned in the key aspects of the model, the main focus is on attaining sustainable

competitive advantage over other firms through the attainment of such strategic resources. The

salt sector in Pakistan can said to be a victim of under utilization of available resources.

According to statistics the salt range in Punjab Province (alone) has the largest deposit of pure

salt found anywhere in the world. Despite having such large reserves we only contribute a

meager 0.63 % to the global production of salt and are ranked 22nd according to stats. This level

of under production means that we lack the efficiency in our processes, machinery, strategies,

policies and other resources. Thus through the model we will analyze where are we going wrong

and what are the major factors behind such inefficiency. We will do a comparative analysis of

Pakistan’s Salt Industry with the world’s leading producers and exporters of salt (such as the US)

and try and point out the particular resources and strategies that have enabled them to be world

leaders in salt production. We will also see if those resources and strategies are imitable, i.e.

whether or not Pakistan can benefit by shifting to those strategies. We will further try to research

certain resources that are specific only to Pakistan and are not imitable by other salt producing

nations giving Pakistan a competitive advantage that is sustainable in the long run. For this we

will make use of the VRIN concept explained in the model.

TYPES OF SALT

The three types of salt available in Pakistan are sea salt, rock salt and lake salt. Discussed below are the sources and methods of extraction for each of the three types.

SEA SALT

With the Arabian Sea embracing our Southern border, nature has gifted with a great source of salt. It may be mistakenly thought that sea salt is the most abundantly available in Pakistan but the fact is that it is the smallest source of salt for us. Seven different factories around the port city of Karachi are currently involved in the production of salt. Daily production of salt via this source amounts to 1100 tons, meaning about 333000 tons annually. These factories are capable of producing high quality salt ranging from 95-98% pure sodium chloride.

Manufacturing process:

Solar salt is obtained by the simple procedure of evaporation. The process for extracting salt from sea water is an ancient technology and involves evaporation ponds. Shallow, water-proof ponds are dug out and connected to the sea by means of short canals. A broad area and shallow depth allow a given volume of water to absorb more sunlight. The pond is flooded, and then the canal is closed. The sun evaporates the water. As the water vaporizes, the salt remains behind, creating ever-more saline water. Eventually enough of the water evaporates to leave behind a layer of sea salt crystals that can be harvested. Modern sea salt extraction operations typically have a number of these ponds concentrated in one location, separated by levees. Time is usually of the essence in evaporating sea water to extract salt, because an untimely rain can ruin days of evaporation. Therefore, some salt evaporation operations use very large indoor ponds called pans, which are protected from the weather.

ROCK SALT

The best and most abundant source of salt here is rock salt. With impressively low impurity content, Pakistan boasts reserves of over ten billion tons. Our Salt Range is known the world

over and total production annually is estimated to be 1800000 tons. Deposits occur naturally underground, occasionally occurring on the surface too. Various methods are used to extract the salt so that it may be brought to use. Drilling, blasting, exploding and crushing the rock are performed in order to extract the salt. Despite having such huge deposits of salt, our mining sites are still underutilized due to lack of infrastructure and machinery.


Room and pillar is a mining system in which the mined material is extracted across a horizontal plane while leaving "pillars" of untouched material to support the overburden leaving open areas or "rooms" underground. It is usually used for relatively flat-lying deposits, such as those that follow a particular stratum. In Pakistan, as the table mentioned earlier shows, most miners use this technique for mining.

The key to the successful room and pillar mining is selecting the optimum pillar size. If the pillars are too small the mine will collapse. If the pillars are too large then significant quantities of valuable material will be left behind reducing the profitability of the mine.[1] The percentage of material mined varies depending on many factors, including the material mined, height of the pillar, and roof conditions; typical values are: stone and aggregates 75%, coal 60%, and potash 50%

Room and pillar mining is one of the oldest mining methods. Early room and pillar mines were developed more or less at random, with pillar sizes determined empirically and headings driven in whatever direction was convenient.

Random mine layout makes ventilation planning difficult, and if the pillars are too small, there is the risk of pillar failure. In coal mines, pillar failures are known as squeezes because the roof squeezes down, crushing the pillars. Once one pillar fails the weight on the adjacent pillars increases and the result is a chain reaction of pillar failures. Once started, such chain reactions can be extremely difficult to stop, even if they spread slowly.

Mine Layout

Room and Pillar mines are developed on a grid basis except where geological features such as faults

http://en.wikipedia.org/wiki/File:Barrier_Panel.png

require the regular pattern to be modified. The size of the pillars is determined by calculation. The load bearing capacity of the material above and below the material being mined and the capacity of the mined material will determine the pillar size.

If one pillar fails and surrounding pillars are unable to support the area previously supported by the failed pillar they may in turn fail. This could lead to the collapse of the whole mine. To prevent this, the mine is divided up into areas or panels. Pillars known as barrier pillars separate the panels. The barrier pillars are significantly larger than the "panel" pillars and are sized to allow them to support a significant part of the panel and prevent progressive collapse of the mine in the event failure of the panel pillars.

LAKE SALT

Apart from the two sources mentioned above, we also have lake salt present in abundant quantity. Located a few hundred kilometers away from Karachi, there are three main sites from where lake salt gets extracted; Mirpurkhas, Badin and Tharparkar. The purity content fluctuates as a result of changing weather conditions but an average of 98% is usually attainable. A meager 300 tons are extracted from the lakes on a daily basis which adds up to a yearly production of 900000 tons. Issues related to infrastructure have been resolved as better roads have been built, making it easier to transport the extracted material.


Harvesting operations for lake salt are slotted into the natural seasonal cycles of the salt lake. The rainfall over the winter months lifts some of the crust of the lake into solution to create brines that cover the surface of the lake. The summer sun evaporates the brine, new salt crystals form and fall to the surface of the lake. When the new season's crop of salt crystals dries, we simply collect them by scraping them from the surface of the lake. Winter makes new brine. Summer evaporates the brine and salt crystals form and so the seasons repeat this entirely natural process.

There is practically no invasive development of the local environment whereas sea salt manufacturing requires great tracts of land to be cleared in order to build artificial evaporation ponds.

Issues with Mining:

Employees exposed to heavy machinery, chemicals and explosives Chemical intake can result in hazardous health effects e.g. high blood pressure, heart

attacks, stroke Salt enters ground water and increased levels of salinity are harmful for vegetation

Pakistan’s Salt Industry

With an abundance of salt deposits at our disposal, Pakistan is known for its high quality salt production. It is the only country for having the world’s largest salt mines with proven reserves of about 10 billion ton in three mines including more than 6.687 billion ton only in the Khewra rocky salt mine, located in the area of district Jhelum. Other major salt mines are Warcha, Kalabagh and Jatta.

At present the Khewra Salt Mine is being managed by Pakistan Mineral Development Corporation (PMDC). According to availability of data with PMDC, it is said that still large quantities of salt exist in its unexplored areas of the mines. Not only have we met our salt requirements from the Khewra Salt Mines, but Pakistan also exports salt to India to the tune of 10 thousand to 18 thousand tons annually. It is also a source of earning foreign exchange for the government.

Yet unfortunately, the salt sector in Pakistan can be said to be a victim of under utilization of available resources. According to statistics the salt range in Punjab Province (alone) has the largest deposit of pure salt found anywhere in the world. Despite having such large reserves we only contribute a meager 0.63 % to the global production of salt and are ranked 22nd according to stats. This level of under production means that we lack the efficiency in our processes, machinery, strategies, policies and other resources. The industry needs to realize where it is going wrong and what the major factors behind such inefficiency are. Taking leading producers and exporters of salt (such as the US) as the benchmark, we can try to imitate the strategies adopted by them particularly in terms of resources that have enabled them to be world leaders in salt production.

Today, there are four major salt crystal mines in Pakistan:

Khewra Salt Mines

The Khewra Salt Mines happen to be one of the oldest and largest salt mines in the entire region. Apart from being a salt reserve, Khewra is also a popular tourist attraction. With all its eighteen working levels and divergent tunnels, it adds up to over 25 miles of developed length The salt crystal in this mine varies from dark red, reddish, pink, white, and even transparent. Naturally available stunning bands of alternating colors are dispersed here and there. The cumulative thickness of the whole salt layer is 150m. While mining, half of the salt is left as pillars within the many chambers; known as "room-and-pillar" method. Yet sadly, the Khewra mining process involves usage of explosives, which not only destroys the integrity of the crystalline structure, but also causes numerous accidents and safety issues, apart from wastage which is avoidable. Miners have to work in these dangerous conditions, putting to risk their own health and safety.

Kalabagh Salt Mines

Found along the Indus River these mines are located near the village known as Wanda Kukranwala. Thirteen different types of salt strata, all colors in various shades, can be found here. Room-and-pillar method mining is still manually done here with some individual chambers more than 260 feet in depth! This also happens to be our primary source mine.

Warcha Salt Mines

The salt deposits found here are known for their highly crystalline and transparent structure, making it very popular for fine, edible, flowing salt used for cooking and dining purposes. This occurs as another dome-like structure, although broken, and the salt crystal is white and pink for the most part. Room-and-pillar mining method is used here too.

Jatta/Bahadurkheil Salt Mines

Among the four major mines, the Jatta are the youngest. According to the geological horizon, it dates to the Tertiary period (26 to 66 million years ago); however there is still some debate to its exact time of formation. The salt of this mine ranges from white to light/dark gray. These are often considered blue in color; and as lamps, these emit less light due to density and color; appearing in varied shades of blue, green, white, and yellow.

Khewra Salt Mines

Warcha Salt Mines

Kalabagh Mines Jatta Salt Mines

Location160km south of Islamabad

276km south of Islamabad

296km from Islamabad or50km from Mianwali

217km from Islamabad or 35 km from Kohat

Leased area 3,398.53 acres 3,601.17 acres 3,837.81 acres 8,449.92 acres

Geological Horizon

Pre-Cambrian Pre-Cambrian Pre-Cambrian Tertiary

Commercial salt Average 96% Average 98%

Shades of saltWhite, Pink and Red

Generally white and pink

White and Pink white, light to dark grey

Mining method Room and Pillar Room and Pillar

Rock Salt Resources

6.687 Billion Tons

Over one Billion tons

Over One Billion tons

Over few Billion tons

Production (2006-07)

465,657 tons 406,979 tons 76,228 tons 83,518 tons

APPLYING THE VRIN CRITERIA ON THE SECTOR RESOURCES IN PAKISTAN

Valuable: As we discussed earlier Pakistan is blessed with the purest salt reserves available on Earth, thus it doesn’t need much refining and is therefore more valuable as compared to other salt producing nations. However, Pakistan has not been able to cash in on this factor as it lacks production facilities despite having the largest reserves of pure salt and is therefore ranked 22 when it comes to salt production.

Rare: Although the salt resources are not rare and are present in abundance in many nations around the world (USA, China, India, etc), what is rare to Pakistan salt reserves is:

1. Pakistan has all three types of salts available at its disposal (Rock, Lake and Sea) which is rarely a case with any salt producing nations. All of them produce only one or at max two types of salts.

2. Purity that goes up to 99 % at places. Such reserves of high purity salt are rarely found in salt producing nations but Pakistan has them in abundance.

Inimitable: Although the competitive advantage Pakistan enjoys over other nations, in terms of getting the purest salt for lowest cost (since not much processing and refining is required), is inimitable but still Pakistan has been ineffective. The main reasons are:

Inefficient mining procedures such as blasting that lead to, otherwise, avoidable wastage. Lack of proper calculations during “Room and Pillar” mining sometimes leading to

caving in of whole mine. Lack of proper infrastructure and transport facilities further adding to the costs.

Non-substitutable: Salt as we all know is a very useful mineral which cannot be substituted with/for anything. Thus having larges reserves of pure salt is a plus point for Pakistan which it needs to take advantage of through improvement in its production processes. Salt is a necessity and its use wont cease until life exists on earth so there is a need to take drastic actions to help the industry grow and prosper as it has got immense potential and capability and can play an important role in the revival of Pakistan Economy.

Competitive Advantage: Pakistan’s competitive advantage lies in the fact that it doesn’t need to invest much in processing and/or refining as it gets around 98% pure salt from its lake and rock salt mines. Thus the costs are reduced in that area. However, as discussed earlier Pakistan has not successfully cashed on to this advantage and has therefore been lacking in terms of production. If proper actions are taken and right policies implied Pakistan have enough reserves to cater to the overall salt demand of the world (for further info on this see the empirical research section of the report).

EMPIRICAL RESEARCH

Interview of Mr.Ismail Suttar (CEO of )

Overview: Pakistan is the only nation that has all three types of salt naturally available in the world-1) Rock Salt, 2)Lake Salt, 3)Sea Salt. Pakistan has one of the largest reserves of salt in the world but we are still only the 22nd largest salt producing nation out of a maximum of 30. We are not even in the first 10 despite having such large reserves.

Rock Salt

Rock salt mountain goes deep several 100 feet. Rock salt mining is also called “Room and Pillar mining” because if the whole mountain is extracted from the centre, it would fall down. Therefore what is done is that after every little distance rooms are made. That is salt is extracted from a place and then pillars are left to hold the top. These rooms are called salt caverns.

1) In developed nations, toxic waste is dumped in these caverns, i.e. waste such as uranium waste, or other radioactive wastages.

2) Oil is stored in these caverns.

3) Gas is stored in these caverns. All types of storage purposes.

Because salt is taken out and now these mines are useless therefore they are used for storage. However, we don’t have any such facility or use of these caverns in the mines of Pakistan.

Lake Salt

Lake salt is a natural gift. There is a 3-5 inches top layer of lake and below that there are reserves for several 100 feet. The top layer can be harvested manually and mechanically. You scrape it, collect it and then remove it. Or you can use a machine. Hub Salt uses machine as well as do it manually since they have high production and there’s shortage of labor in the deserts. As soon as you remove a layer in the lake, acre by acre, the water table rises on its own naturally and within 15 days the new layer forms. So Mr.Ismail Suttar and all other salt experts claim that it is the only mineral of Earth that will never deplete. Self-replication mechanism is in action here. There are about 70 lakes in Pakistan. The Average size of each lake is 700 acres, making it a total of 49000 acres. Around 10 tons of salt is excavated each day from one acre of lake. Even if we look at the worst case scenario we would still be able to excavate at least 5 tons of salt per acre. There are 9 months in a year when excavation from lake is possible, excluding

the 3 months of monsoon season. 49000 X 5≈2.5 lac tons per day are produced. 2.5 lacs X 270 days (9 months) ≈67.5 million tons per year from lake salt only. And that too without touching the deposits but with the fresh crystallization layer only. So the foots of deep deposits contain trillions of tons in deposits. If we get serious, we can do wonders with our country. With 49000 acres we can harvest so much with lake salt, all we need is laborers, their tools and action. Zero investment required and zero machinery required. Currently we are only producing 900000 tons per annum which is a lot less than our capacity. Total world production of salt in September 2008 was around 210 million tons. So if we make a conscious effort and improve upon the efficiency of the rock salt and the sea salt, then we can easily cater to the world demand of salt and be the market leaders!

Sea Salt

Sea salt is produced through solar evaporation of sea water and is the smallest source of salt in Pakistan. The sea salt production is carried on here at 7 different factories with a total daily production of well above 1100 tons or 330000 tons per year. The 7 different producers differ in quality with each other all these are located in or around the cosmopolitan city of Karachi, as being a port city, it enjoys excellent seashore of the Arabian Sea with very fast winds almost all round the year. The best quality amongst these are sometimes found to be as good as 98% pure NaCl and normally the quality varies between 95% to 98% depending on the season and individual factory management.

The average rainfall is extremely low and thus solar salt production enjoys a very conducive weather condition almost all over the year.

Wherever there is sea, there are certain lagoons. If you go to Hawksbay, Sandspit, then there are these roads. In the morning these places dry up and in the evening, the tides bring water over these places. The water comes during high tide and flows back in low tide. So if the salt plant is made here, then it would get caught up in high tide low tide game, therefore factory can’t be set up there. So you need to have a space where there is no tidal interference. So we dig a trench in the lagoon and when there is high tide the water stores in the trench and during low tide it does not go back as it is captured. A sort of natural pond is created. So water is pumped from this place through pumping plants into condenser no: 1. It is then transferred to condenser no: 2 and then to no: 3, and so on. There are around 12-15 of these condensers and the purity level of the salt (brine solution) increases as it passes the different stages of the process. The brine solution is then kept for evaporation for around 15-20 days depending on the weather (dry weather is the most suitable).

Market Mechanism

Demand: The major consumer of salt is Japan that imports a lot of salt to meet its industrial and domestic demand (domestic demand is not as much). Then we have other Asian countries that follow Japan when it comes to salt consumption. These mainly include Korea, Malaysia, Singapore, Vietnam and few other south Asian countries. Global demand for salt is forecast to rise 2.6% per year to 301.5 million tons in 2013.

Supply: Production is higher in countries like Australia, China, Mexico and USA. However, USA is not an exporter of salt. It produces enough salt to meet its local demand only and thus it is not a threat to the world market leaders who are exporting salt. China also produces but is not a major exporter. It caters to its local demand and exports the excess. Major exporters are mainly Australia and Mexico. India has also started entering the market gradually (export of 2 million tons last year) but it is still not a major threat as its internal demand is also increasing.

Opportunity: We are strategically placed nearer to these south Asian nations but still Australia and Mexico are exporting salt to them. This is only due to the fact that we are not utilizing our resources properly and are not operating at full capacity. If we head in the right direction and keep on increasing the production we can be leaders in world export very soon.

Sector wise consumption: Table salt is not more than 5% of the entire salt that is used around the world. So, for instance if you sell 1kg of salt, then approximately only 50gm of salt is used in food preparation (average). This average is disturbed a bit in some parts of the world due to different levels/types of industrialization, example Bangladesh where 50% of the salt is consumed and the rest is used in industries. The perception of the general public is that salt is mainly used for domestic consumption but its industrial uses are far greater. The no.1 industrial use of salt worldwide is Road Salt. What is road salt? Wherever it snows, people sprinkle salt on roads. The process is also known as Road Deicing. That is the number one area in the world market where salt is consumed. But in Pakistan since the roads in the northern regions or the mountainous areas where it snows the most are not as developed so Road Salt is not much used here. No. 2 most widely salt using industry is the Chloro-alkali industry. The manufacturers of chlorine, caustic soda and soda ash are called chloro-alkali industries. Caustic soda as well as soda ash is used in every industry as a raw material. Both of these are very important chemically. Caustic soda is sodium hydroxide and soda ash is sodium bicarbonate. They are very important in any industry you look at. If you manufacture 1 ton soda ash, you need 1.2tons of salt in its making. 3rd largest consumers of salt are the other industries such as textile, dying, bleaching, soap and detergents. Detergent is a big industry, because in every 1kg pack of detergent there is 40% salt.

PROBLEMS

The salt sector is an unorganized sector that lies in the hands of illiterate people. Lake salt deposits in Pakistan are in abundance but people in this industry do not know about it. They do not even know the main difference between rock salt and lake salt. Even the salt literacy among the general public is very low.

Secondly, the research and development in this sector is non-existent! The only Research and Development is done by the firms themselves and the companies in the industry have to use their own resources to work on this aspect. And since it requires a lot of time, effort, and money only a few big firms like HubPak can afford to do that. Thus there is a lack of initiative by the firms who continue to work on the small-scale without working towards the prospect of expanding and going global. We are not competitive in this sector as we do not work hard. Firms cheat and copy to obtain results quickly. Thus there is a duplication of efforts in the sector. There hasn’t been much investment in this sector as this sector does not yield a lot of profits in the short run.

There is a lack of infrastructure and transport in this industry. Every firm that intends to set up a plant near any lake (for lake salt), first has to improve the area around it by building roads and improving the infrastructure. Transport is not even subsidized by the government.

International buyers use unfair means to cut their costs. They would claim that the products that are exported from Pakistan contain defects by sending pictures showing such and therefore ask for discounts. This is the problem concerning the export of Rock salt.

The sector still employs traditional method of mining for the production of rock salt. The industry would benefit a lot if new and state-of-the-art technology is used instead. Improved cutting tools rather than blasting methods in Rock salt mining would especially increase the productivity of Khewra mines and reduce wastage.

There is domestic competition on the small scale but our main market which is of exports and high end products; there is no competition in that market. We lack in the quality that is demanded internationally.

Issues with mining

Employees are exposed to heavy machinery, chemicals and explosives.

There is wastage due to wrong mining techniques such as blasting.

The room spaces in mines are not utilized for storage purpose.

Caving in of whole mine takes place due to inappropriate pillar mining.

Salt enters ground water and increases the levels of salinity which is harmful for vegetation and crops.

Role of government:

Government has not done anything for the salt sector except for one. They removed the excise on salt in around 1984-5. One positive thing they have done is that they have imposed a 15% duty on firms producing non-iodized salt to bring them on equal footing when it comes to competing on price since cost of producing iodized salt is higher as compared to producing non-iodized salt. It also charges a 5-10 Rupee royalty per ton of salt extracted from the miners whom it leases the mine after an agreement.

However, it can do a lot of things by improving the infrastructure, like building roads till the salt lakes and providing electricity at the plant sites. It can even build artificial canals from the sea. All the inland transport cost would be saved as the cargo would pass directly through the canal and in to the sea and to its final destination.

Secondly, the government should provide some subsidy on the transport cost since it is already giving some subsidy to other sectors.

The government has not put in place the policies that are needed in order to encourage foreign investment.

Recommendations

Up till now, no policy has been made regarding the salt industry hence; a separate

department should be made by the government which should design policies for the

sector.

The working conditions in the mine are very bad, the mine is all dark and there is no

proper lighting facility. PMDC should provide proper lighting in the mines.

In Interior Sindh, there are no roads that link civilization to the salt lakes; hence the

companies cannot reach the lakes to set up their plants. The Government should make

these roads so that these lakes are accessible.

There has been no foreign investment in this sector due to lack of security. If the

government guarantees security, then foreign firms would invest in this sector.

The existing firms need to upgrade themselves by reinvesting in their businesses.

There is no research center in Pakistan, and the existing research is only being done by

HubPak on individual basis only. A research center should be formed which would

hopefully help in the up gradation of the existing giants.

Currently, sea salt is produced on very low quantity, so area near the sea should be

given on lease to the companies. The companies would set up their plants there and the

overall production of salt will increase.

According to the industrialists, transport cost is a major issue; they say that the

government should provide them fuel at subsidized rates.

The government should provide incentives so that this sector attracts investment.

Proper and latest technology should be used for mining and processing so that wastage

is minimized. For mining, room and pillar mining should be used all across Pakistan

instead of just “blasting” the mines.

CONCLUSION

The decision to prepare a report on the salt industry of Pakistan was taken mainly due to the fact that there is very limited published information on the subject. When we began working, the only information we had access to were the company reports we were provided with. With that in hand, we set out to make a small contribution ourselves.

Initially, we too were unaware and aloof of the existing situation of the salt sector here in Pakistan. Interviewing the CEO of HubPak, we got to know plenty of issues that were at hand, their possible solutions and how, if properly given attention too, this sector has the capacity to grow and contribute much more to the GDP than it does now. Not only does this sector cater to strictly industrial uses, it is also a revenue generator when it comes to tourism. We came to know that the Khewra mines are so magnificently structured that many visitors are left in awe at the beauty of it.

There are different techniques of extracting salt, from each of the three sources. The techniques are modified in a way that the process is made time and cost effective. Unfortunately, the lack of resources and proper training has resulted in wrong procedures being made use of. Machinery relevant to the purpose it is to serve and adequate logistics can potentially turn the situation around. Our reliance on ancient techniques and craft learnt from our forefathers has caused us to be relatively backward when it comes to extracting and transporting salt.

Pakistan is a country blessed with all three types of salt; lake salt, rock salt and sea salt. With such huge reserves at hand, it’s a shame it ranks 20th in terms of world salt production. Adequate measures need to be taken as there is plenty of room for improvement. Government support in this sector can be one of the most critical factors that will help the industry become competitive. The industrialists too need to take up initiatives in launching Research and Development centers that can contribute to advancement in this sector. With such improvements underway, we can aspire to compete with the likes of Australia, Mexico and China.

We hope that this report will be a great source of information for those who wish to know more about the salt industry of Pakistan and who seek to make a change in the industry itself.

References

http://www.pmdc.gov.pk/

http://www.pakistaneconomist.com/issue2002/issue32/i&e6.htm

http://www.docstoc.com/docs/25142690/Sector-Overview

http://www.associatedcontent.com/article/1162718/the_importance_of_salt_in_our_diet.html

http://www.saltinstitute.org/

http://en.wikipedia.org/wiki/Resource-based_view

Appendix

http://en.wikipedia.org/wiki/Resource-based_view

http://www.saltinstitute.org/

http://www.associatedcontent.com/article/1162718/the_importance_of_salt_in_our_diet.html

http://www.docstoc.com/docs/25142690/Sector-Overview

http://www.pakistaneconomist.com/issue2002/issue32/i&e6.htm

http://www.pmdc.gov.pk/

Resource-based view

The resource-based view (RBV) is an economic tool used to determine the strategic resources

available to a firm. The fundamental principle of the RBV is that the basis for a competitive

advantage of a firm lies primarily in the application of the bundle of valuable resources at the

firm’s disposal (Wernerfelt, 1984, p172; Rumelt, 1984, p557-558). To transform a short-run

competitive advantage into a sustained competitive advantage requires that these resources are

heterogeneous in nature and not perfectly mobile (Barney, 1991, p105-106; Peteraf, 1993, p180).

Effectively, this translates into valuable resources that are neither perfectly imitable nor

substitutable without great effort (Hoopes, 2003, p891; Barney, 1991, p117). If these conditions

hold, the firm’s bundle of resources can assist the firm sustaining above average returns. The

VRIO model also constitutes a part of RBV.

Contents

1 Concept

2 Definitions

o 2.1 What constitutes a "resource"?

o 2.2 What constitutes "competitive advantage"?

3 History of the resource-based view

o 3.1 Barriers to imitation of resources

o 3.2 Developing resources for the future

o 3.3 Complementary work

4 Criticisms

5 Further reading

6 See also

7 References

Concept

The key points of the theory are:

1. Identify the firm’s potential key resources.

2. Evaluate whether these resources fulfill the following (VRIN) criteria:

o Valuable - A resource must enable a firm to employ a value-creating strategy, by

either outperforming its competitors or reduce its own weaknesses (Barney, 1991,

p99; Amit and Shoemaker, 1993, p36). Relevant in this perspective is that the

transaction costs associated with the investment in the resource cannot be higher

than the discounted future rents that flow out of the value-creating strategy

(Mahoney and Prahalad, 1992, p370; Conner, 1992, p131).

o Rare - To be of value, a resource must be by definition rare. In a perfectly

competitive strategic factor market for a resource, the price of the resource will be

a reflection of the expected discounted future above-average returns (Barney,

1986a, p1232-1233; Dierick and Cool, 1989, p1504; Barney, 1991, p100).

o In-imitable - If a valuable resource is controlled by only one firm it could be a

source of a competitive advantage (Barney, 1991, p107). This advantage could be

sustainable if competitors are not able to duplicate this strategic asset perfectly

(Peteraf, 1993, p183; Barney, 1986b, p658). The term isolating mechanism was

introduced by Rumelt (1984, p567) to explain why firms might not be able to

imitate a resource to the degree that they are able to compete with the firm having

the valuable resource (Peteraf, 1993, p182-183; Mahoney and Pandian, 1992,

p371). An important underlying factor of inimitability is causal ambiguity, which

occurs if the source from which a firm’s competitive advantage stems is unknown

(Peteraf, 1993, p182; Lippman and Rumelt, 1982, p420). If the resource in

question is knowledge-based or socially complex, causal ambiguity is more likely

to occur as these types of resources are more likely to be idiosyncratic to the firm

in which it resides (Peteraf, 1993, p183; Mahoney and Pandian, 1992, p365;

Barney, 1991, p110). Conner and Prahalad go so far as to say knowledge-based

resources are “…the essence of the resource-based perspective” (1996, p477).

o Non-substitutable - Even if a resource is rare, potentially value-creating and

imperfectly imitable, an equally important aspect is lack of substitutability

(Dierickx and Cool, 1989, p1509; Barney, 1991, p111). If competitors are able to

counter the firm’s value-creating strategy with a substitute, prices are driven down

to the point that the price equals the discounted future rents (Barney, 1986a,

p1233; sheikh, 1991, p137), resulting in zero economic profits.

3. Care for and protect resources that possess these evaluations because doing so can

improve organizational performance (Crook, Ketchen, Combs, and Todd, 2008).

The characteristics mentioned under 2 are individually necessary, but not sufficient conditions

for a sustained competitive advantage (Dierick and Cool, 1989, p1506; Priem and Butler, 2001a,

p25). Within the framework of the resource-based view, the chain is as strong as its weakest link

and therefore dependent on the resource displaying each of the four characteristics to be a

possible source of a sustainable competitive advantage (Barney, 1991, 105-107).

Definitions

What constitutes a "resource"?

Jay Barney (1991, p101) referring to Daft (1983) "citation needed" says: "...firm resources

include all assets, capabilities, organizational processes, firm attributes, information, knowledge,

etc; controlled by a firm that enable the firm to conceive of and implement strategies that

improve its efficiency and effectiveness (Daft,1983)."

A subsequent distinction made by Amit & Schoemaker (1993, p35) is that the encompassing

construct previously called resources can be split up into resources and capabilities. In this

respect resources are tradable and non-specific to the firm, while capabilities are firm-specific

and used to utilize the resources within the firm, such as implicit processes to transfer knowledge

within the firm (Makadok, 2001, p388-389; Hoopes, Madsen and Walker, 2003, p890). This

distinction has been widely adopted throughout the resource-based view literature (Conner and

Prahalad, 1996, p477; Makadok, 2001, p338; Barney, Wright and Ketchen, 2001, p630-31).

What constitutes "competitive advantage"?

A competitive advantage can be attained if the current strategy is value-creating, and not

currently being implemented by present or possible future competitors (Barney, 1991, p102).

Although a competitive advantage has the ability to become sustained, this is not necessarily the

case. A competing firm can enter the market with a resource that has the ability to invalidate the

prior firm's competitive advantage, which results in reduced (read: normal) rents (Barney, 1986b,

p658). Sustainability in the context of a sustainable competitive advantage is independent with

regards to the time-frame. Rather, a competitive advantage is sustainable when the efforts by

competitors to render the competitive advantage redundant have ceased (Barney, 1991, p102;

Rumelt, 1984, p562). When the imitative actions have come to an end without disrupting the

firm’s competitive advantage, the firm’s strategy can be called sustainable. This is contrary to

other views (e.g. Porter) that a competitive advantage is sustained when it provides above-

average returns in the long run. (1985).

History of the resource-based view

Some aspects of theories are thought of long before they are formally adopted and brought

together into the strict framework of an academic theory. The same could be said with regards to

the resource-based view.

While this influential body of research within the field of Strategic Management was named by

Birger Wernerfelt in his article A Resource-Based View of the Firm (1984), the origins of the

resource-based view can be traced back to earlier research. Retrospectively, elements can be

found in works by Coase (1937), Selznick (1957), Penrose (1959), Stigler (1961), Chandler

(1962, 1977), and Williamson (1975), where emphasis is put on the importance of resources and

its implications for firm performance (Conner, 1991, p122; Rumelt, 1984, p557; Mahoney and

Pandian, 1992, p263; Rugman and Verbeke, 2002). This paradigm shift from the narrow

neoclassical focus to a broader rationale, and the coming closer of different academic fields

(industrial organization economics and organizational economics being most prominent) was a

particular important contribution (Conner, 1991, p133; Mahoney and Pandian, 1992).

Two publications closely following Wernerfelt’s initial article came from Barney (1986a,

1986b). Even though Wernerfelt was not referred to, the statements made by Barney about

strategic factor markets and the role of expectations can, looking back, clearly be seen within the

resource-based framework as later developed by Barney (1991). Other concepts that were later

integrated into the resource-based framework have been articulated by Lippman and Rumelt

(uncertain imitability, 1982), Rumelt (isolating mechanisms, 1984) and Dierick and Cool

(inimitability and its causes, 1989). Barney’s framework proved a solid foundation for other to

build on, which was provided with a stronger theoretical background by Conner (1991),

Mahoney and Pandian (1992), Conner and Prahalad (1996) and Makadok (2001), who positioned

the resource-based view with regards to various other research fields. More practical approaches

were provided for by Amit and Shoemaker (1993), while later criticism came from among others

from Priem and Butler (2001a, 2001b) and Hoopes, Madsen and Walker (2003).

The resource based view has been a common interest for management researchers and numerous

writings could be found for same. Resource based view explains a firm’s ability to reach

sustainable competitive advantage when different resources are employed and these resources

cannot be imitated by competitors which ultimately creates a competitive barrier (Mahoney and

Pandian 1992 cited by Hooley and Greenley 2005, p.96 , Smith and Rupp 2002, p.48). RBV

explains that a firm’s sustainable competitive advantage is reached by virtue of unique resources

which these resources have the characteristics of being rare, valuable, inimitable, non-tradable,

non-substitutable as well as firm specific (Barney 1999 cited by Finney et al.2004, p.1722,

Makadok 2001, p. 94). These authors write about the fact that a firm may reach a sustainable

competitive advantage through unique resources which it holds, and these resources cannot be

easily bought, transferred, copied and simultaneously they add value to a firm while being rare. It

also highlights the fact that all resources of a firm may not contribute to a firm’s sustainable

competitive advantage. Varying performance between firms is a result of heterogeneity of assets

(Lopez 2005, p.662, Helfat and Peteref 2003, p.1004) and RBV is focused on the factors that

cause these differences to prevail (Grant 1991, Mahoney and Pandian 1992, Amit and

Shoemaker 1993, Barney 2001 cited by Lopez 2005, p.662).

Fundamental similarity in these writings is that unique value creating resources will generate a

sustainable competitive advantage to the extent no competitor has the ability to use same type of

resources either through acquisition or imitation. Major concern in the RBV is focused on the

ability of the firm to maintain a combination of resources that cannot be possessed or build up in

a similar manner by competitors. Further such writings provide us the base to understand that the

sustainability strength of competitive advantage depends on the ability of competitors to use

identical or similar resources that makes the same implications on a firm’s performance. This

ability of a firm to avoid imitation of their resources should be analyzed in depth to understand

the sustainability strength of a competitive advantage.

Barriers to imitation of resources

Resources are the inputs or the factors available to a company which helps to perform its

operations or carry out its activities (Amit and Shoemaker 1993, Black and Boal 1994, Grant

1995 cited by Ordaz et al.2003, p.96). Also these authors state that resources, if considered as

isolated factors doesn’t result in productivity hence coordination of resources is important. The

ways a firm can create a barrier to imitation is known as “isolating mechanisms” and are

reflected in the aspects of corporate culture, managerial capabilities, information asymmetries

and property rights (Hooley and Greenlay 2005, p.96, Winter 2003,p. 992). Further, they

mention that except for legislative restrictions created through property rights, other three aspects

are direct or indirect results of managerial practices.

King (2007, p.156) mentions inter-firm causal ambiguity may results in sustainable competitive

advantage for some firms. Causal ambiguity is the continuum that describes the degree to which

decision makers understand the relationship between organizational inputs and outputs

(Ghinggold and Johnson 1998, p.134, Lippman and Rumlet 1982 cited by King 2007, p.156,

Matthyssens and Vandenbempt 1998, p.46). Their argument is that inability of competitors to

understand what causes the superior performance of another (inter-firm causal ambiguity), helps

to reach a sustainable competitive advantage for the one who is presently performing at a

superior level. What creates this inability to understand the cause for superior performance of

firm? Is it the intended consequence of a firm’s action? Holley and Greenley (2005, p.96) state

that social context of certain resource conditions act as an element to create isolating

mechanisms and further mentions that three characteristics of certain resources underpins the

causal ambiguity scenario which are tacitness (accumulated skill-based resources acquired

through learning by doing) complexity (large number of inter-related resources being used) and

specificity (dedication of certain resources to specific activities) and ultimately these three

characteristics will consequent in a competitive barrier.

Referring back to the definitions stated previously regarding the competitive advantage that

mentions superior performance is correlated to resources of the firm (Christensen and Fahey

1984, Kay 1994, Porter 1980 cited by Chacarbaghi and Lynch 1999, p.45) and consolidating

writings of King (2007, p.156) stated above we may derive the fact that inter-firm causal

ambiguity regarding resources will generate a competitive advantage at a sustainable level.

Further, it explains that the extent to which competitors understand what resources are

underpinning the superior performance, will determine the sustainability strength of a

competitive advantage. In a scenario that a firm is able to overcome the inter-firm causal

ambiguity it does not necessarily result in imitating resources. As to Johnson (2006, p.02) and

Mahoney (2001, p.658), even after recognizing competitors valuable resources, a firm may not

imitate due to the social context of these resources or availability of more pursuing alternatives.

Certain resources like company reputation are path dependent that are accumulated over time

and a competitor may not be able to perfectly imitate such (Zander and Zandre 2005, p.1521 ,

Santala and Parvinen 2007, p.172).

They argue on the base that certain resources, even imitated may not bring the same impact since

the maximum impact of same is achieved over longer periods of time. Hence, such imitation will

not be successful. In consideration of the reputation fact as a resource, does this imply that a first

mover to a market always holds a competitive advantage? Can a late entrant exploit any

opportunity for a competitive advantage? Kim and Park (2006, p.45) mentions three reasons new

entrants may be outperformed by early entrants. First, early entrants have a technological

knowhow which helps them to perform at a superior level. Secondly, early entrants have

developed capabilities with time that enhances their strength to perform above late entrants.

Thirdly, switching costs incurred to customers if decided to migrate, will help early entrants to

dominate the market evading the late entrants opportunity to capture market share. Customer

awareness and loyalty is a rational benefit early entrants enjoy (Liberman and Montgomery

1988, Porter 1985, Hill 1997, Yoffie 1990 cited by Ma 2004, p.914, Agrawal et al. 2003, p. 117).

However, first mover advantage is active in evolutionary technological transitions which are

technological innovations based on previous developments (Kim and Park 2006, p, 45, Cottam et

al. 2001, p. 142). Same authors further argue that revolutionary technological changes (changes

that significantly disturb the existing technology) will eliminate the advantage of early entrants.

Such writings elaborate that though early entrants enjoy certain resources by virtue of the

forgone time periods in the markets, rapidly changing technological environments may make

those resources obsolete and curtail the firm’s dominance. Late entrants may comply with the

technological innovativeness and increase pressure of competition, hence, seek for a competitive

advantage through making the existing competences and resources of early entrants invalid or

outdated. In other words innovative technological implications will significantly change the

landscape of the industry and the market, making early mover’s advantage minimum. However,

in a market where technology does not play a dynamic role, early mover advantage may prevail.

Analyzing the above developed framework for Resource Based View, it reflects a unique feature

which is, sustainable competitive advantage is achieved in an environment where competition

doesn’t exist. According to the characteristics of the Resource based view rivalry firms may not

perform at a level that could be identified as a considerable competition for the incumbents of the

market since they do not possess the required resources to perform at a level that creates a threat

hence create competition. Through barriers to imitation incumbents ensure that rivalry firms do

not reach a level to perform in a similar manner to them. In other words, the sustainability of the

winning edge is determined by the strength of not letting other firms compete in the same level.

The moment competition becomes active competitive advantage becomes ineffective since two

or more firms begins to perform at a superior level evading the possibility of single firm

dominance hence no firm will enjoy a competitive advantage. Ma (2003, p.76) agrees stating that

by definition, the sustainable competitive advantage discussed in the Resource based view is

anti-competitive. Further such sustainable competitive advantage could exist in the world of no

competitive imitation (Barney 1991, Petref 1993 cited by Ma 2003, p.77, Ethiraj et al., 2005, p.

27).

For further discussion of causal ambiguity see causal ambiguity.

Developing resources for the future

Based on the empirical writings stated above RBV provides us the understanding that certain

unique existing resources will result in superior performance and ultimately build a competitive

advantage. Sustainability of such advantage will be determined by the ability of competitors to

imitate such resources. However, the existing resources of a firm may not be adequate to

facilitate the future market requirement due to volatility of the contemporary markets. There is a

vital need to modify and develop resources in order to encounter the future market competition.

An organization should exploit existing business opportunities using the present resources while

generating and developing a new set of resources to sustain its competitiveness in the future

market environments, hence an organization should be engaged in resource management and

resource development (Chaharbaghi and Lynch 1999, p.45, Song et al., 2002, p.86). Their

writings explain that in order to sustain the competitive advantage, it’s crucial to develop

resources that will strengthen their ability to continue the superior performance. Any industry or

market reflects high uncertainty and in order to survive and stay ahead of competition new

resources becomes highly necessary. Morgan (2000 cited by Finney et al.2004, p.1722) agrees

stating that, need to update resources is a major management task since all business

environments reflect highly unpredictable market and environmental conditions. The existing

winning edge needed to be developed since various market dynamics may make existing value

creating resources obsolete. (" Achieving a sustainable competitive advantage in the IT industry

through hybrid business strategy: A contemporary perspective"- Tharinda Jagathsiri (MBA-

University of East London)

Complementary work

Building on the RBV, Hoopes, Madsen & Walker (2003) suggest a more expansive discussion of

sustained differences among firms and develop a broad theory of competitive heterogeneity.

“The RBV seems to assume what it seeks to explain. This dilutes its explanatory power. For

example, one might argue that the RBV defines, rather than hypothesizes, that sustained

performance differences are the result of variation in resources and capabilities across firms. The

difference is subtle, but it frustrates understanding the RBV’s possible contributions (Hoopes et

al., 2003: 891).

“The RBV’s lack of clarity regarding its core premise and its lack of any clear boundary impedes

fruitful debate. Given the theory’s lack of specificity, one can invoke the definition-based or

hypothesis-based logic any time. Again, we argue that resources are but one potential source of

competitive heterogeneity. Competitive heterogeneity can obtain for reasons other than sticky

resources (or capabilities)” (Hoopes et al. 2003: 891). Competitive heterogeneity refers to

enduring and systematic performance differences among close competitors (Hoopes et al., 2003:

890).

Criticisms

Priem and Butler (2001) made four key criticisms:

The RBV is tautological, or self-verifying. Barney has defined a competitive advantage

as a value-creating strategy that is based on resources that are, among other

characteristics, valuable (1991, p106). This reasoning is circular and therefore

operationally invalid (Priem and Butler, 2001a, p31). For more info on the tautology, see

also Collins, 1994

Different resource configurations can generate the same value for firms and thus would

not be competitive advantage

The role of product markets is underdeveloped in the argument

The theory has limited prescriptive implications

However, Barney (2001) provided counter-arguments to these points of criticism.

Further criticisms are:

It is perhaps difficult (if not impossible) to find a resource which satisfies all of the

Barney's VRIO criterion.

There is the assumption that a firm can be profitable in a highly competitive market as

long as it can exploit advantageous resources, but this may not necessarily be the case. It

ignores external factors concerning the industry as a whole; Porter’s Industry Structure

Analysis ought also be considered.

Long-term implications that flow from its premises: A prominent source of sustainable

competitive advantages is causal ambiguity (Lippman & Rumelt, 1982, p420). While this

is undeniably true, this leaves an awkward possibility: the firm is not able to manage a

resource it does not know exists, even if a changing environment requires this (Lippman

& Rumelt, 1982, p420). Through such an external change the initial sustainable

competitive advantage could be nullified or even transformed into a weakness (Priem and

Butler, 2001a, p33; Peteraf, 1993, p187; Rumelt, 1984, p566).

Premise of efficient markets: Much research hinges on the premise that markets in

general or factor markets are efficient, and that firms are capable of precisely pricing in

the exact future value of any value-creating strategy that could flow from the resource

(Barney, 1986a, p1232). Dierick and Cool argue that purchasable assets cannot be

sources of sustained competitive advantage, just because they can be purchased. Either

the price of the resource will increase to the point that it equals the future above-average

return, or other competitors will purchase the resource as well and use it in a value-

increasing strategy that diminishes rents to zero (Peteraf, 1993, p185; Conner, 1991,

p137).

The concept ‘rare’ is obsolete: Although prominently present in Wernerfelt’s original

articulation of the resource-based view (1984) and Barney’s subsequent framework

(1991), the concept that resources need to be rare to be able to function as a possible

source of a sustained competitive advantage is unnecessary (Hoopes, Madsen and

Walker, 2003, p890). Because of the implications of the other concepts (e.g. valuable,

inimitable and nonsubstitutability) any resource that follows from the previous

characteristics is inherently rare.

Sustainable: The lack of exact definition with regards to the concept sustainable makes its

premise difficult to test empirically. Barney’s statement (1991, p102-103) that the

competitive advantage is sustained if current and future rivals have ceased their imitative

efforts is versatile from the point of view of developing a theoretical framework, but a

disadvantage from a more practical point of view as there is no explicit end-goal.

Questionnaire

About the industry

1. What are the types of salt available and how much does each type contribute to the overall

production of salt?

2. What are the various production processes used for extraction of each type of salt?

3. What industries does it cater to?

Competition

4. Who are the greatest competitors, what threats do they pose? How can they compete better?

5. What sort of competition exists between the firms and what are the pros and cons?

6. On what basis do firms generally compete in this industry? Price/quality, etc.

Politico-economic environment

7. What have been the effects of political and economic environments?

8. Were there any incidents they recall where industry suffered or improved as a result of changes

in political scenario?

9. Mode of distribution/marketing?

10. Have any clusters been developed that facilitate coordination between the elements of the

supply chain?

Demand Conditions

11. How do you cater to the local demand?

12. Is there any foreign demand for salt? How do cater that?

13. What are the latest export earnings figures?

Research and Development

14. What technological developments have they undergone since they entered the industry?

15. How has the level of HR been modified and improved upon? Training, workshops?

16. Any R&D initiatives undertaken?

17. Internationally, empty salt mines are effectively utilized for storage purposes. Once salt is mined

out, what use is made of the voids here in Pakistan?

18. Despite having huge reserves at our disposal, why is it that we rank 29th in terms of world salt

production?

19. What level of government support do they have?

20. Do you think the salt industry is using the resources that are available in the most efficient

manner? Why not?

Recommendations

21. What more can the government do?

22. What is being done to achieve sustainable long term competitive advantage?

api

Documents

salt sector of pakistan

types of salt

salt industry of pakistan

salt mining

seasolar salt

available salt lake

pakistan economy

major sources of salt