Bahrain-based Gulf Finance House (GFH) said on Wednesday it would set up a $5 billion steel firm with partners to help meet growing demand for construction materials in the region. HadeedMENA would have initial capacity of 8 million tons of steel per year for the next four years, Gulf Finance said in a statement, without clarifying whether the production would take place at one or more plants. It said output could reach 12 million tons of steel in the future, the company said in the statement, without giving a specific timeframe. While upstream production will be located in countries rich in iron ore and coal, downstream activity will focus on countries that have high demand for the metal in the Middle East and North Africa region. Global rebar consumption reached 218 million tons last year. Around 65-70 percent of consumption comes from the Middle East and Asia while the highest consumption per capita is in the UAE. Demand for iron and steel in the world's biggest oil-exporting region could climb more than 30 percent to 19.7 million tons this year, according to the Gulf Organization for Industrial Consulting. The total value of civil projects in the Gulf is estimated at around $1.5 trillion, and demand for housing is expected to soar on robust population growth, particularly in Saudi Arabia, analysts have said. Other partners in the venture are Emirates International Investment Co, Khaleej Development Co, Q-Invest and First Energy Bank. GFH's strategic partners are Emirates International Investment Company, Khaleej Development Company (KDC), Q-Invest and First Energy Bank. Leading technical partners and market advisers are MN Dastur and Gulf Organization for Industrial Consulting. The project will deliver a capacity of 8 million tons of steel per annum in the next four years, and target to reach 12 million tons in the future, serving 15 percent of total regional needs and become one of the key steel producers in the MENA region. 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 tons (2006) of steel end products, although the region produces only around 24 million tons. 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. Gulf Finance House Chairman Esam Janahi said: “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. The company is currently in the final negotiation stages for a number of partnerships and acquisitions that we will be able to announce in the near future.” “GCC economies realize 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. Instead of being dependent on steel imports, we will now be able to produce this essential product within our own border, said Dr. Ahmed Mutawa of GOIC. “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, chairman of MN Dastur, said “the plants will adopt the latest technology and manufacturing techniques by partnering with leaders in steel manufacturing; 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. 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,” said professor Abdulatif Al-Meer, managing director of Q-Invest in Qatar. __
