The National reported that the Kuwaiti and Japanese JV behind Bahrain's USD 1.2 billion Hidd Steel Mill project is planning to acquire a steel rolling mill in Saudi Arabia.
Bahrain's biggest steel company will take over a Saudi rival by next month as it pushes on with an expansion effort to become the Middle East's first fully integrated producer. The acquisition will allow the company to drop plans to build an additional plant in Bahrain and accelerate its timescale of delivering steel products from light to heavy sections by 3 years.
The Hidd Steel Mill in Bahrain is being constructed by United Steel Company, JV of the Bahrain based United Steel Holding Company and Japan's Yamato Kogyo Company.
Mr Khalid Al Qadeeri CMD of Sulb said that "Sulb won the tender and we are in negotiations to acquire a rolling mill in Saudi Arabia. We are in the final stages of due diligence and confident that we will conclude the deal by November.
Mr Khalid Al Qadeeri vice CMD of Foulath said that Foulath's acquisition reflects its strategy to control every link in the steel supply chain from iron ore mines to the output of finished products all with a view towards lowering its costs of production in a continued down market.
Mr Al Qadeeri said that the company would commit billions of dollars to its expansion effort and would put up as much as 70% equity in each investment. In a good market everyone makes money in a bad market, if you're not integrated, you won't survive. You can't survive as a standalone. Other regional producers including the UAE's Emirates Steel Industries and Saudi Arabia's Hadeed have pursued their own integration strategies but have yet to invest in raw material pellet plants or iron ore supply. The billets will be transported via barge from Bahrain to the new mill.
Mr Robin Parker the regional manager for Stemcor said that prices for imported steel rebar in the Gulf, a benchmark for the industry have increased 16.5% over the past 12 months to USD 600 per tonne. Prices could hit USD 700 per tonne next year.
Mr Al Qadeeri said that Foulath's acquisition target a steel mill in Saudi Arabia will be fed by barge with steel pellets produced at its plants in Bahrain. It is also building USD 1.2 billion three part steel plant in Bahrain, adjacent to its pellet plants that will turn a portion of the pellets into finished, heavy steel products such as I beams for the construction industry.
He said that the plant is 49% owned by Yamato Kogyo, a Japanese company, and is due to be completed by the beginning of 2013. Foulath's goal is that half of the pellet output from Bahrain will be steered towards In house steel making plants including the acquisition in Saudi Arabia.
(Sourced from the National)
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