Demand for steel in Mena is rising at one of the quickest rates in the world. Now a UAE-Saudi partnership is looking to satisfy it.
ABU DHABI // Seizing an opportunity to meet an increasing demand for steel in the region, upstart company United Iron and Steel (UIS) chose Abu Dhabi as an ideal place to invest Dh1 billion and set up a manufacturing plant.
The World Steel Association says demand for the metal in the Mena region is expected grow by 4 per cent this year, increasing to 4.7 per cent in 2016 – some of the steepest growth rates in the world.
Company chairman Sheikh Mohammed Al Rahbani, from Saudi Arabia, said UIS was positioned well to capitalise on those forecasts by choosing Abu Dhabi.
The location decision was based on a number of factors, including the right infrastructure and security that accompanies political stability.
Sheikh Mohammed said: “We realised that they have fantastic infrastructure, including a low cost for energy.
“This is an incentive for investors. It’s the right environment.”
He said the new Mussaffah facility would produce painted and galvanised steel – a product where the alloy is treated with a protective, rustproof coating. It will be used for a variety of applications, including construction and home appliances.
Seventy per cent of the GCC’s galvanised steel is imported, he said.
But the initial goal of UIS – a joint venture between Saudi Arabia’s Safid Group and the UAE’s Abdul Jalil Group – is not to compete with large-scale steel manufacturers, but to produce 250 metric tonnes. Its first full year of production is expected to be 2017.
By 2019, the company’s goal is to operate at capacity, producing as much as 500 metric tonnes of steel each year.
At full capacity, the plant will require 20 megawatts of electricity.
Describing Abu Dhabi’s hydro costs as “cheap”, Sheikh Mohammed said the lower operating expenses would offer a competitive advantage.
Logistically, the new plant will be close to local and regional markets.
“Abu Dhabi is quite close to Dubai and only a day’s drive to Riyadh, with good roads too,” he said.
Potential export markets also include the rest of the GCC, North Africa and Europe. Sheikh Mohammed said the Riyadh-based Safid group will purchase about a fifth of the factory’s output, and a company in Abu Dhabi will buy a tenth.
He said setting up a business in the UAE was similar to what could be experienced in Europe.
“I would describe it as an easy process, I’m really happy with the system,” he said.
“Everything has gone smoothly, we had all the support of the government; we had no challenges at all.”
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