GHC, Danieli sign accord for steel mill expansion

Wednesday, Sep 16, 2009

Gulf News

Abu Dhabi: General Holding Corporation (GHC), the parent company of Emirates Steel, late on Monday signed a Dh1.74 billion contract with Danieli Corporation for the construction of phase II B of Emirates Steel's Dh9 billion expansion, a move that would help bring the Abu Dhabi-based company closer to becoming the region's largest steel manufacturer.

Towards that end, Emirates Steel is also looking to acquire a steel company, its chairman Hussain Al Nowais told Gulf News on Tuesday.

"We have a memorandum of understanding with a potential target company that we have identified for acquisition. We will make an announcement in due course," Al Nowais said, declining to elaborate.

"Both the expansion plan and overall growth strategy of Emirates Steel are in line with the government's long-term plans for the development and diversification of the emirate's economy," said Shaikh Hamed Bin Zayed Al Nahyan, the Chairman of the Abu Dhabi Crown Prince's Court and GHC Chairman.

"The expansion is also part of the overall backward integration plan, which will ensure a competitive market position for Emirates Steel."

Emirates Steel said Danieli will be the turnkey engineering, procurement and construction (EPC) contractor for phase II B, which will see a heavy section rolling mill with an annual production capacity of 1 million metric tonnes added to Emirates Steel's facilities by the end of 2011. The company currently has a capacity of 2 million metric tonnes a year.

Emirates Steel also said phase II of the expansion project is two months ahead of schedule with onsite construction progress of the phase at 52 per cent, as of August.

Phase II B's rolling mill, the first of its kind in the Gulf Cooperation Council, will produce heavy section beams and columns, channels, angles and sheet piles, manufactured to international standards.

Al Nowais said the plant's new facilities will see Emirates Steel increasing its production capacity to 6.5 million metric tonnes a year by 2015.

By Himendra Mohan Kumar, Staff Reporter