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Agha Steel signs Rs10.5b MoU with Horizon Steel

Agha Steel signs Rs10.5b MoU with Horizon Steel

KARACHI: Agha Steel Industries is going to sell 100,000 metric tons of low-carbon billets worth approximately Rs10.5 billion per annum to Horizon Steel, according to a press release issued here on Monday. The announcement comes just days before the initial public offering (IPO) of Agha Steel Industries.

In this regard, the two companies on Monday signed a memorandum of understanding (MoU) that ensures Agha Steel will supply the intermediate steel product used as a raw material by the downstream steel industry.

“Thanks to product innovation and heavy investments in research and development (R&D), Agha Steel can now manufacture refined low-carbon quality billets, used in the wire rod industry, for the first time in Pakistan. Until now, the downstream industry relied heavily on expensive imported raw material. The latest development will result in huge import substitution and also benefit the national exchequer,” said Agha Steel Chief Marketing Officer (CMO) Suleman Lakhani.

The company uses the latest European electric arc furnace technology supplied from Danieli to produce billets, a transitional steel product that can either be turned into steel bars used in construction or into wire rods to manufacture various high value engineering products.

“With the realisation of this MoU, Agha Steel’s sales are going to grow by 68 per cent from the current level within a year. We foresee many such contracts with companies operating in the downstream industry. The availability of good quality raw materials is going to enlarge the country’s steel industry to its true potential” Lakhani added.

It may be mentioned here that Agha Steel is going public next month in order to finance its expansion drive.

Unlike most local steel-makers that use traditional induction furnace for melting scrap, Agha Steel has invested in a high-efficiency and environment-friendly electric arc furnace.

It recently increased its billet-making capacity from 250,000 MT to 450,000 MT a year.

Speaking on the occasion, Horizon Steel Chief Executive Officer (CEO) Shoaib Sultan said that it was encouraging that steel products can now be made end-to-end within Pakistan.

“I expect the downstream industry will see tremendous growth in coming years and the future looks very bright,” he said.