Amreli Steels finalises Rs2bln expansion plan

KARACHI: Amreli Steels Limited, country’s leading steelmaker, on Tuesday announced its board had approved the second phase of expansion to increase its annual production capacity of reinforcement bars to 750,000 tons within the next two years.

The total cost of the expansion is estimated at Rs2.0 billion.

“The company will expand its plant located in SITE (Sindh Industrial Trading Estate) Karachi by 95,000 tons/annum, taking its annual capacity to 275,000 tons/annum, from the current 180,000 tons/annum,” the company said in a bourse filing said.

“The modernisation would result in savings on account of lower cost of utility, wastage, and maintenance.”

The re-bar roller also said it had earlier envisaged this expansion to add 145,000 tons/annum to its annual capacity, but did not give a reason for the change in the estimate.

The company decided to embark on the phase-II of capacity expansion in view of the growing construction activity around the country that is believed to sustain high levels of growth over the next decade.

The approved expansion, according to the company officials would further enhance the footprint of Amreli Steels Limited across the country by supplying quality rebars for infrastructure development and fulfilling needs of retail customers across Pakistan.

More than 100 steel makers are operating in the country, while steel is also imported to meet the demand of construction sector.

An analyst at Taurus Securities said “the notice in effect, trims down the envisaged annual SITE Karachi rolling capacity by 50,000 TPA”.

Amreli Steel also informed that it would be closing down the SITE Karachi plant for a minimum period of 10 months, starting June 2019 to March 2020, and that the plant was expected to resume production later by April 2020, to revamp and modernise the plant.

“This was expected as according to the management, the Dhabeji expansion is expected to come online by next month, after which, Amreli would be prioritising production from the much larger Dhabeji plant than the SITE facility in order to avail tax credits, and achieve lower fuel and power costs/ton,” the analyst added.

Currently, the steelmaker has an annual steel rebar manufacturing capacity of 180,000 metric tons. It produces high quality billets in melt shop. The World Steel Association projected steel demand in Pakistan at more than 12 million tons by 2019 from 7.1 million tons in 2015.

The steel manufacturer last year also announced a joint venture with a Chinese company to produce and sell electrical transmission equipment in the country seeing a raft of new power projects on their way to meet growing energy demand.

It has been looking for a joint venture with Chinese company Qingdao Huijintong Power Equipment Company Limited (HJT) and both the parties have agreed to consider establishing company in Pakistan which will be engaged in production and sale of electrical transmission towers and metal structural products.