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GFH to create steel giant in MENA region

DAMMAM: Gulf Finance House (GFH) , the leading Islamic investment bank with a track record for innovation, yesterday announced plans to create HadeedMENA, a new steel producing company. Conceived by GFH , HadeedMENA aims to plug the shortfall in domestic steel production in the Middle East and North Africa.

In a deal with an estimated end value of $5 billion, GFH is partnering with Emirates International Investment Company , Khaleej Development Company (KDC) , Q-Invest , and First Energy Bank , and leading technical partners and market advisers MN Dastur and Gulf Organization for Industrial Consulting (GOIC) ; all of whom have a strong reputation regionally and internationally. 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 Middle East and North Africa (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 about 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 borders," said Ahmed Mutawa from GOIC .

"We are pleased to join Gulf Finance House 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, employing the most up-to-date technology and processes."

Professor Abdulatif Al-Meer, managing director of Q-Invest in Qatar, said "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."

By Faiz Al-Mazrouie

© Arab News 2008