Emirates Steel Industries, a subsidiary of Abu Dhabi Basic Industries Corporation (Adbic), said it has signed a sales contract with Sweden’s LKAB to source quality iron ore pellets beginning 2013.

LKAB is an international high-tech minerals group that produces iron ore products for the steel industry and mineral products for other industries and applications.

Highlighting the importance of the agreement, Hussein J Al Nowais, the chairman of Senaat, the holding company of Emirates Steel, said it aims to complement the company’s efforts to enhance the value of its steel products by sourcing high quality raw materials with international standards.

He recognized the expertise and high regard in the market for LKAB.

Al Nowais, who is also the chairman of Emirates Steel, confirmed that the company will continue to elevate its investment plans to accommodate the increasing demand for steel in local and regional markets.

Commenting on the Swedish agreement, he said, "Emirates Steel will further grow its competitive advantages by increasing its focus on quality and raising the standards of products to higher levels as LKAB becomes one of the partners contributing to the company’s development plans."

The Senaat chairman, along with other board members and senior management officials from both parties, witnessed the contract signing by Emirates Steel CEO Saeed Ghumran Al Romaithi and LKAB chief executive offiicer Lars-Eric Aaro.

Al Romaithi pointed out that the long-term strategic relationship positions the Swedish firm as one of Emirates Steel’s primary suppliers of iron ore pellets.

Emirates Steel, the largest integrated steelmaker in the UAE, has pellets requirements this year of around 4.8 million tons. These are supplied through long-term agreements which now include LKAB.

The new agreement, he stated, will strengthen Emirates Steel's supply in support of its future growth plans.

In 2012, Emirates Steel began for the first time producing at a capacity of 3.5 million (metric tons) MT, following two expansions at an investment of Dh10 billion ($2.72 billion).

The other planned projects in the future are expected to boost the company’s output of finished products to more than 5.5 million MT, he added.

Al Romaithi said the new supply highlights the company's confidence about the long-term prospects for the steel industry in the Mena region.

"The long-term contract helps us secure the supply of our primary feed material. Pellets are a primary raw material for Emirates Steel to produce high quality direct reduced iron (DRI)," he stated.

On the UAE partnership, Aaro said the agreement was a confirmation that its Swedish products were attractive in the market.

"Emirates Steel plays a significant role in the UAE’s steel making industry and we are absolutely delighted to be able to support its future development by guaranteeing a stable and predictable supply of iron ore," said the Swedish group chief.

LKAB boasts of about 4000 employees in 14 countries and accounts for 10 per cent of Sweden’s industrial investments.-TradeArabia News Service