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Gulf Finance House (GFH) is planning to launch a $5 billion steel producer that can meet 15 per cent of the region's demand within five years.
It is setting up HadeedMENA along with strategic partners which will be able to produce eight million tonnes of steel a year within four years and eventually 12 million tonnes to make it one of the key steel producers for the Middle East and North Africa (Mena) region.
The company will set up upstream production facilities in Asia and North Africa, where there are abundant supplies of iron ore and coal to produce steel billets which will then be processed into steel bars and structures at plants in the GCC where there is an exceptional demand for steel from the construction industry.
The upstream operations are likely to be in North Africa and Libya, Yemen and India.
Where the downstream operations will be based will be announced later but it is expected that at least one facility will be in Bahrain. HadeedMENA aims to plug the shortfall in domestic steel production in the Middle East and North Africa.
'We intend to differentiate ourselves by taking a top to bottom approach to the value chain,' said GFH chairman Esam Janahi.
'It will focus both on upstream productions for steel billets as well as the downstream manufacturing for steel 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 soon.'
He said that the company would be capitalised at $1.25 billion through share placement but that further funds would be available and he did not rule out an initial public offering (IPO) though other funding was available.
GFH is partnering with strategic partners Emirates International Investment Company, Khaleej Development Company (KDC), Q-Invest, and First Energy Bank, and leading technical partners and market advisers M N Dastur and Gulf Organisation for_Industrial Consulting (GOIC).
It is estimated that the Middle East alone accounts for more than $2 trillion of investments in the construction and real estate sector. The Mena region consumes approximately 35.4 million tonnes of steel end products, although the region produces only around 24 million tonnes.
'GCC economies realise that establishing new manufacturing and service capacity will allow them to be far more responsive to their long-term domestic needs,' said GOIC secretary general Dr Ahmed Mutawa.
KDC vice-chairman and managing director Ahmed Al Qattan said we are pleased to join GFH in this partnership as it forms one of the main industrial development initiatives in the region.
'We believe our plans will give us the competitive advantages required to become a serious regional player.'
Q-Invest managing director Professor Abdulatif Al Meer said 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.
