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Sunday, May 19, 2024

Agha Steel building $42 mln plant at Port Qasim to meet CPEC demand: report

Pakistan’s Agha Steel Industries (ASI) is setting up $42 million plant at Port Qasim to meet demand from CPEC and government projects.

Under the China-Pakistan Economic Corridor (CPEC) and PM’s Naya Pakistan Housing Program the construction activity in Pakistan has surged and Agha Steel Industries Limited (ASI) aims to set up a Rs7 billion ($42 million) steel manufacturing plant at Port Qasim to meet the growing demand.

“To finance the expansion project, we plan to raise Rs3.6 billion through initial public offering at the Pakistan Stock Exchange early next month,” Hussain Agha, chief executive of the company, told Arab News in an exclusive interview on Friday. The company is set to import Rs2.7 billion worth of plant and machinery.

Intial public offering for Agha Steel Industries Limited (ASI)

ASI will offer 120 million shares at a price of Rs30. The management says 75 percent will be offered through book-building process while the remaining shares will be issued to the public through retail offer at a strike price determined by the book-building process.

Agha Steel has acquired the neighbouring land beside its current facility and will install a new Micro Mill Danieli Rolling Mill, which is going to be much more compact than traditional mini-mills as it will occupy 49 percent less space and result in 23 hours of uninterrupted production.

Read more: Exploiting Pakistan’s steel mills

“This technology guarantees 99 percent recovery,” Agha informed while explaining how the average yield in Pakistan from billet was 90-92 percent while the international standard was 97 percent.

“After the expansion, we will have one of the largest steel manufacturing facilities in Pakistan,” he said, stating that the company would produce all kinds of steel products for the countries requirements, including the ones used in constructing of dams.

Steel sector benefits from CPEC projects 

Pakistan’s steel sector is benefiting greatly by the construction of dams financed by Chinese investment according to the $60 billion mega CPEC program and government’s cost-effective housing plan.

“We have made bids for five dam projects,” the ASI chief said, adding: “We expect that steel will be in huge demand as the country constructs dams, mainline ML-1 train track and gets into coal and wind projects. Construction activity in Pakistan is booming.”

Read more: Revival of steel mills

Steel producers in Pakistan estimate that 2.17 million tons of steel is required in the next two years for the dam and housing projects. 1.5 million tons of steel is estimated to be needed for seven hydropower plants, such as Dasu and Diamer-Bhasha dams which are expected to require 900,000 metric tons.

Surging demand for steel products 

Agha says there is likely to be a surge in demand after PM Imran announced incentives for the construction sector. “Last year, our sale to real estate developers was 12 percent,” he said. “Today, we are looking at more than 35 percent … which implies about 200 percent growth in this segment. The government’s policies are translating into ground realities, and the central bank is supporting the growth momentum.” “If the government built 100,000 housing units, we believe it would generate a demand of about one million tons of steel only for these homes,” he stated.

Read more: Pakistan Steel Mills playing dirty as Renault struggles to enter Pakistan

The company expects its revenue to increase to Rs26.18 billion this fiscal year (FY21) from Rs15.7 billion in the outgoing fiscal year (FY20). It forecasts its revenue to be Rs58.4 billion in FY24. Agha Steel is also eyeing the export of its steel products after satisfying the domestic demand which, at present, stands at about 5 million tons per annum.

The company expects revenues to surge up to Rs26.18 billion in the current fiscal year (FY21) from Rs15.7 billion last year. Predicted revenue for FY24 is Rs58.4 billion. ASI after meeting the current 5 million tons per annum domestic demand also plans on exporting its steel products.

“Exporting steel from Pakistan was a longtime dream,” Agha said, stating that his company could potentially become an exporter by 2023. “Pakistan will become the epicenter of steelmaking in the region,” he stated confidently.

GVS News Desk with additional input from other sources