Agha Steel signs Rs10.5bn MoU with Horizon Steel
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KARACHI: Agha Steel Industries is going to sell 100,000 metric tons of low-carbon billets worth approximately Rs 10.5 billion per annum to Horizon Steel, a press release said on Monday.
The two companies have signed a memorandum of understanding (MoU) that ensures Agha Steel will reliably supply the intermediate steel product that the downstream steel industry uses as raw material.
“Thanks to product innovation and heavy investments in R&D, Agha Steel is able to manufacture for the first time in Pakistan refined low-carbon quality billets that are used in the wire rod industry. Until now, the downstream industry heavily relied on expensive imported raw material. That’s going to result in huge import substitution and big benefit for our national kitty,” said Suleman Lakhani, chief marketing officer of Agha Steel.
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 transformed into wire rods to manufacture many high value engineering products.
“With the realization 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 this industry to its true potential” added the CMO of Agha Steel, which is going public next month to finance its expansion drive.
Unlike most local steel-makers that use the 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 CEO Shoaib Sultan said it was encouraging to witness 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.
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