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Al Qahtani in deal on steel pipe plant
Published in The Saudi Gazette on 15 - 06 - 2011

JEDDAH: Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited, together with its subsidiaries, the largest longitudinal submerged arc welded pipe (LSAW) manufacturer in China, said Monday that Panyu Chu Kong Steel Pipe Company Limited, the group's wholly-owned subsidiary, entered into an agreement with Abdel Hadi Abdullah Al Qahtani & Sons, Co. to establish a joint venture company with a total capital of $106 million.
The JV company will be owned 50 percent by PCKSP and 50 percent by AHQ and the total investment commitment in the JV company by the group will not exceed $53 million.
The proposed principal business of the JV company will be the manufacturing and sale of LSAW steel pipe and ERW steel pipe. Pursuant to the agreement, the JV company will set up two mills in two phases including one LSAW plant and one ERW plant with an annual design capacity of 300,000 tons and 200,000 tons respectively.
Chen Chang, chairman of the Group, said "the JV company is the first company in the region to provide LSAW steel pipe in the local market and therefore effectively filling a large gap in the requirements of the market.
The establishment of the JV company not only increase the group's production capacity and develop, strengthen and expand the market shares of our products in Saudi Arabia and other neighboring countries, it can also create enormous synergy effect for the group.
The group could benefit from having lower cost of delivery by setting up production plants in the vicinity of the group's established customers and potential clients. 2011 is a year that global infrastructure projects are picking up their pace of development, and the demand of international steel pipe market has been on the rise since the end of last year.
The agreement can leverage “on our experienced management team, research and development capabilities and state-of-the-art technology.”


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