Gulf Finance House, a leading Bahrain-based Islamic investment bank, on Wednesday announced plans to set up a $5 billion steel company in partnership with leading financial houses to plug the shortfall in domestic steel production in Mena region.

The new company HadeedMena will have a capacity of 8 million tonnes of steel per annum in the next four years, said a company official.

The company will later boost its output to 12 million tonnes thus catering to 15 per cent of total regional needs and would become one of the key steel producers in the Mena region.

GFH has tied up with strategic partners - Emirates International Investment Company, Khaleej Development Company (KDC), Q-Invest, and First Energy Bank, and leading technical partners and market advisors MN Dastur and Gulf Organization for Industrial Consulting for the venture.
 
It is estimated that the Middle East alone accounts for more than $2 trillion of investments in the construction and real estate sector as a result of the surplus created through high oil prices.

Meanwhile, the Mena region consumes approximately 35.4 million tonnes (2006) of steel end products, although the region produces only around 24 million tonnes.

HadeedMena will operate in a number of locations across Asia and Africa, serving both upstream and downstream requirements in the marketplace.

Upstream production will be located in countries rich in iron ore and coal, while downstream activity will focus on countries with exceptionally high demand across the GCC and Mena region.

“We intend to differentiate ourselves by taking a ‘top to bottom’ approach to the value chain. It will focus both on upstream productions for steel billets as well as the downstream manufacturing for steel re-bars and structures," said GFH chairman Esam Janahi.
 
He pointed out that the company was currently in its final stages of negotiations for a number of partnerships and acquisitions.

“GCC economies realise that establishing new manufacturing and service capacity will allow them to be far more responsive to their long-term domestic needs. The creation of HadeedMena is a perfect example of this approach," noted Dr. Ahmed Mutawa from GOIC.

"Instead of being dependent on steel imports, we will now be able to produce this essential product within our own borders," he added.

“We are pleased to join GFH in this partnership as it forms one of the main industrial development initiatives in the region. We believe our plans for this company will give us the competitive advantages required to become a serious regional player’, said Ahmed Al Qattan, vice chairman and managing director of Khaleej Development Company (KDC).

Commenting on the technical plans of the company, Supriya Das Gupta, the chairman of MN Dastur said the plants will adopt the latest technology and manufacturing techniques by partnering with leaders in steel manufacturing and employing the most up-to-date technology and processes.

"Beyond the immediate economic benefits, this kind of initiative has a wide-ranging impact on employment levels and standards of life," he added.

"Steel production generates a strong pipeline of follow on jobs in engineering, manufacturing, design and support sectors – all of which provide jobs and improved standards of living,” added Professor Abdulatif Al Meer, managing director of Q-Invest in Qatar.-TradeArabia News Service