'Raw materials supplied by ArcelorMittal will be converted into steel by Kremikovtzi. The steel products are also to be marketed by Kremikovtzi,' it said in a statement.
The agreement would see an initial production of 60,000 tonnes of steel and could lead to more deals with Arcelor in the future, the statement added.
Pramod Mittal, the younger brother of Indian tycoon and Arcelor owner Lakshmi Mittal, holds a 71-percent stake in Kremikovtzi, which has an annual production capacity of 1.4 million tonnes.
Built on the outskirts of Sofia under Communism, the plant produces about 10 percent of Bulgaria's exports and is 25 percent owned by the state.
However Kremikovtzi needs huge investment to meet EU environmental standards and is facing deep financial problems, with Bulgarian media speculating it could be near bankruptcy.
ArcelorMittal and Vorskla Steel, owned by Ukrainian billionaire Konstantin Jevago, have already declared their interest in acquiring the plant.