The UAE’s Emirates Steel Industries (ESI) is considering changing its phase three expansion plans again by moving the proposed $1bn-plus project back to Taweelah in Abu Dhabi, from Mussafah.

The move is being prompted by a potential gas allocation at the Taweelah site that would allow the company to build a direct reduced iron (DRI) steel shop producing 1 million tonnes a year of large size sections, beams, columns and sheet piles.

“ESI wants to make a number of grades [of steel] that are just not possible to make with only an electric arc furnace,” says a steel source based in the Middle East. “If Taweelah is where the gas is then that is where the phase three will be.”

ESI’s phase three has been in the planning stages for well over a year now and there has still not been a tender issued for the project. In June 2010, MEED revealed that the company was reviewing its decision to develop the plant at Taweelah, and could move the project adjacent to its existing complex at the Abu Dhabi Industrial City in Mussafah. The potential gas allocation has led to company to review that decision and consider going back to Taweelah for phase three.

A spokesman for ESI told MEED, “ESI and its parent company GHC (General Holding Corporation) are assessing various business opportunities for expansion into the production of flat steel products.” He added, “A number of marketing and pre-feasibility studies have been completed, however, no concrete steps have been finalised to date with reference to any further expansion plans.”

Prospective bidders are hoping that a final decision will be made shortly so tenders for the project can be released in either April or May.

The exact scope of the tender is not known as yet, but it is believed that two separate packages will be issued, one for the equipment and the other for the engineering, procurement and construction (EPC) contract. The equipment package will then be novated over to the successful EPC contractor.

“We are waiting for the tender now,” a contracting source says. “It will be interesting to see which way [ESI] is going to go with the choice of site.”

The phase three expansion of the Emirates Steel project has been shrouded in uncertainty for a number of reasons. Initially, the company bid to buy the Shadeed Iron & Steel plant in Oman from Abu Dhabi’s Al-Ghaith Holdings, but the plant was eventually bought by India’s Jindal Group (MEED 20:5:11). If ESI had acquired the Oman plant, it is likely that would have taken the place of the potential phase three production.

ESI is owned by Abu Dhabi’s state-controlled GHC through Abu Dhabi Basic Industries Corporation (Adbic). The company is currently commissioning its phase two DRI steel shop with completion of the rolling mill due at the end of 2012.