An Abu Dhabi conglomerate plans to develop a Dh1.1 billion steel plant that will create 370 jobs.
Senaat, the state-owned Abu Dhabi-based holding corporation, said it has entered a joint venture with two Japanese steel makers to build steel pipes for industrial use.
The plan for the new company, Al Gharbia Pipe, comes as the emirate accelerates its push to diversify from crude oil.
JFE Steel and Marubeni-Itochu Steel are joining Senaat in the project to manufacture steel pipes for customers in the energy and construction industries at a plant in the Khalifa Industrial Zone of Abu Dhabi (Kizad).
The company will reduce the country’s reliance on steel pipe imports while exporting 40 per cent of its production, Senaat executives said in Abu Dhabi yesterday.
“In striving to uphold our mandate of championing UAE industry and contributing to the nation’s diversification efforts, Senaat will continue to expand its portfolio through global partnerships with leaders in their respective fields,” said Suhail Al Ameri, the chief executive of Senaat.
“The project not only meets stringent demand at a time where being efficient in the oil and gas and other industries is more important than ever, but it is also symbolic of the strength and the calibre of the relationships that we are able to forge.”
Al Gharbia Pipe is expected to be up and running by 2018 with a production capacity of 240,000 tonnes a year. The Japanese companies will provide the steel plates for manufacturing the pipes, but Senaat said it would be open to taking steel from local producers if they could meet its specifications.
Financing of the company is expected be done this year and the Japanese firms will have a 49 per cent stake in the venture, according to Jamal Al Dhaheri, Senaat’s chief operating officer.
Senaat is aiming to build a steel hub in the emirate to grow the country’s industry. The company’s portfolio of businesses already includes Emirates Steel and Taweelah Aluminum Extrusion Company. Expanding the industrial base has become increasingly urgent after the price of oil, upon which Abu Dhabi relies to drive economic growth, shed about half of its value since June amid an increase in North American energy production.
Senaat said this week that it plans to invest Dh5bn over the next two years to develop refining industries and is considering an initial public offering of one of its units this year, the chairman said.
The company has invested more than Dh16bn developing the metals sector over the past five years, said Hussain Al Nowais.
Still, Takafumi Nishiuma, vice president of JFE Steel, said that despite the recent drop in oil, there was still plenty of demand projected for steel pipes from energy companies in the Arabian Gulf.
“The GCC region is highly competitive in terms of drilling costs and oil and gas reserves capacity,” he said. “With the development and production of oil and gas forecast to remain robust across the region despite recent volatility, the demand for high-quality steel pipelines to transport these resources is expected to expand steadily. We see high opportunities for investment in this market, and particularly in the UAE.”
Senaat, which translates as “industries”, manages more than $6.9bn of industrial assets and employs more than 15,000 people.
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