JEDDAH, 7 November 2006 -- A major steel plant is being established at the Yanbu Industrial City II. The SR1 billion plant, whose civil works begin immediately, will go into commercial production in the second half of 2008.

An agreement was signed for the supply of equipment worth SR800 million for the plant between the Kingdom's Atoun Steel Industry Co. (ASi) and Austria's Voest-Alpine Co. at the Jeddah Hilton yesterday.

ASi's Constituent Committee Chairman Ahmad Ali Hazza said after the signing ceremony that the Austrian company had been selected after a review of some companies.

"The plant will cover an area of 530,000 square meters and produce one million tons of steel annually once it starts its commercial operations," he said.

The plant will also produce reinforcement bars for the construction industry, which is booming not only in and around Yanbu but also elsewhere in the Kingdom and the Gulf. "Our expansion plans in the future will be followed as per the market needs," he added.

Attending the event were Austrian Ambassador Dr. Friedrich Stift and German Consul General Dr. Hubert Lang.

Hazza thanked the Royal Commission of Yanbu for providing the infrastructure for the project.

"We commend the strength of the Saudi economy and its rapid development in all sectors," a top executive for the Austrian company said.

Khalid A. S. Al-Mukairin, a board member of Bank Albilad, speaking on behalf of Asi, said that the plant was being established at a time when there had been qualitative economic development across the Kingdom, following its accession to the World Trade Organization.

"The plant will go into commercial production on Nov. 1, 2008, and its capacity will be increased to 1.2 million tons a year in its second phase," Al-Mukairin said.

Exuding confidence about the success of the plant and its operations was Abdul Rahman S.A. Al-Hanaky of Saleh Al-Mutlaq Al-Hanaki Trading Co.

Based in Jeddah, the ASi has been established by 24 investors and is projected to cover local market needs. It will also explore export possibilities in future.

"The contract reflects the (Austrian) company's expertise and capability to carry out such major projects," Helmut Wagner, vice president, iron and steel making technologies, project management, at the Voest-Alpine company, told Arab News.

Wagner, who was accompanied by Thomas Narholz of Siemens VAI Fuchs GmbH, said the steel produced at this plant would mainly meet the local requirement, especially for many infrastructure projects and new housing plans for Yanbu announced by the Kingdom. Many projects are also coming up in Jizan, which could be a potential area for the plant's steel. Raw materials for the plant will include scrap and iron ore sourced from international markets.

"We assume 600 to 700 workers will be employed in the plant. Plant workers will comprise local and international experts," he said.

The Austrian company is a market leader in the Middle East and this is its sixth plant across the Kingdom, he added. "We've supplied equipment for various projects in the Kingdom and the region. We've supplied for all plants of Hadeed Iron & Steel Company of Saudi Basic Industries Corporation, with the first plant built in 1980, as well as for plants in Jubail. We have also supplied for or built plants in Dammam, Kuwait and Oman," Wagner said. "This is our sixth plant in the Kingdom," he added.

By K.S. Ramkumar

© Arab News 2006