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United Iron & Steel starts Abu Dhabi plant construction

United Iron & Steel starts Abu Dhabi plant construction
12 April 2015 8:45 GMT
Two phases of galvanised steel operation expected to cost AED1bn

Saudi-UAE joint venture United Iron & Steel Company (UIS) has started the construction of its proposed steel cold-rolling plant in Abu Dhabi after awarding the major contracts.

The 250,000 tonne-a-year (t/y) plant to produce galvanised steel is expected to start operations at the end of 2016.

The civil construction contract was awarded to Abu Dhabi’s Al-Diyar Contracting Company in January, Dubai-based Zameel Steel Corporation has been contracted to provide the steel structure for the factory, while Italy’s Danieli is the main technology supplier.

UIS changed the location of the project to Industrial City Abu Dhabi (ICAD 3) just outside the capital city from a previous site at Khalifa Industrial Zone Abu Dhabi (Kizad) on the border with Dubai.

“We changed the location for various reasons … mainly for the availability of a good size of land and low-cost energy supplies,” UIS chairman Sheikh Mohammed al-Rahbani told MEED, saying the plant will require 20MW of electricity.

After the plant is complete, UIS plans to double the capacity to 500,000 t/y in a second phase. Sheikh Mohammed expects the total investment for both phases to reach AED1bn ($272m).

About 40 per cent of the investment capital comes from the owners of UIS – a joint venture of the UAE’s Abdul Jalil Group and Saudi Arabian air conditioning company Safid – with the remaining 60 per cent raised through facilities. 

The plant will produce pre-coated galvanised iron (PPGI) in a range of thickness between 0.025mm and 25mm for use in a variety of construction applications.

Safid plans to utilise 20 per cent of product volumes with more than 50 per cent expected to be sold in the Middle East. The remainder will be taken up by customers in Europe and Africa.

Sheikh Mohammed, who is also the chairman of Safid, says UIS will also find clients through the air conditioning group’s existing customer base.

Middle East demand for the PPGI has been driven by construction and government infrastructure investment, used in roofing, cladding and air conditioning ducting.

“As long as the governments in the GCC are spending on infrastructure and megaprojects, as long as the boom is continuing, I think demand will grow,” says Sheikh Mohammed.

“We have a number of raw materials sources including Sabic [Saudi Basic Industries Corporation] and [UAE-based] Al-Ghurair Iron & Steel and we have a good source of raw materials from Japan, but we are not limited to these sources,” he says.

UIS estimates that more than 50 per cent of the GCC’s annual demand for galvanised iron and steel products is imported, creating an opportunity for local producers.

The chairman says Safid is expanding rapidly in Saudi Arabia along with the country’s construction market.

“We can feel that we are growing very fast, acquiring new land for new factories and it all has to do with the demand from the growth that Saudi Arabia is going through now,” he says. “We are hoping to move from indoor, into outdoor solutions.”