Bahrain steel maker plans $5m investments
Manama, June 6, 2011
Bahrain-based Gulf United Steel Holding Company (Foulath) said the company is looking at investments of $3 million to $5 million in a mining company to fill the gap in its steel integration plans.
“We will go for a consortium. We wish to take a major stake,” Foulath managing director Khalid Al Qadeeri said while speaking at a press conference on Sunday.
Al Qadeeri admitted that the steel investment firm's acquisition plans had been hit by the uncertain conditions in the aftermath of a global economic recession and the overall caution with regards to stakes in mining firms.
"Currently the only missing link in the integration chain is mining but that is an investment that will be costly for all," he remarked.
Foulath also plans to build in collaboration with strategic investors two iron pelletisation plants in Egypt and one in Oman, each having a production capacity of 7 million tonnes.
However, he said the Arab spring had disrupted progress in these projects.
Currently, Foulath operates an iron pelletisation plant and a cold-rolled stainless steel mill in Bahrain’s Hidd Industrial City. A $1.2 billion plant comprising a direct reduced iron unit, a melt shop and a heavy section rolling mill is under construction.
Al Qadeeri pointed out that the integrated complex would not only be of the highest standard and quality but also the most competitive in terms of cost.
Foulath holds 51 per cent of SULB’s shares, while Yamato Kogyo has the rest. The other two key players are iron pellets producer Gulf Industrial Investment Company (GIIC) and cold-rolled stainless steel maker United Stainless Steel Company (USCO).
The three companies are in operation adjacent to each other in the Hidd Industrial Area and located in a complex of 1.3 million sq m. GIIC and USCO, whose production capacities are 12 million T and 100,000 T, are wholly owned subsidiaries of Foulath.
The three production facilities of SULB, GIIC and USCO signify an integrated value chain from iron pellets to final steel products.
Foulath, the holding company, has Gulf Investment Corporation of Kuwait as its main shareholder with 50 per cent of the shareholding.
Qatar Steel holds 25 per cent while three Kuwaiti companies – MA Al Kharafi & Sons, the National Industrial Holding Group and the Kuwait Foundry Company – own the remainder shares.
According to Al Qadeeri, SULB’s total capacity would take care of 20 per cent of imports of 4 million tonnes of similar products into the region.
Al Qadeeri said the plant was being set up at a time when construction activity was at a new high in the wake of plans to build five economic cities in Saudi and infrastructure projects worth $33 billion being planned in Kuwait and $65 billion in Qatar.
In this regard, he also pointed out that the GCC had allocated $20 billion to support Bahrain and Oman’s economic growth.
SULB, said Al Qadeeri, had earmarked $20 million more than what was required to make the integrated complex environmentally secure.
'A 20-metre-high wall had been built around the plant, the world’s only steel plant to have such a protective barrier,' he revealed.
Al Qadeeri dispelled environmental concerns over the construction and operation of SULB saying the world-class builders were meeting not only Bahrain regulations but those of their own home states and international standards.
Al Qadeer said SULB was a low-cost plant and had a total cost advantage $252 per tonne from various standpoints including operations and shipping compared to a similar facility built in China.
He thanked the Government of Bahrain led by King Hamad bin Isa Al Khalifa for its continued support to Foulath and its associated companies.
'Not only will SULB help lessen regional import requirements for medium and heavy steel sections into the Middle East markets, it will also make a significant socio-economic contribution to Bahrain, where we expect to employ approximately 1,000 people, with a target of 70 per cent Bahraini nationals,' he added.-TradeArabia News Service