Emirates Steel Industries’ (ESI) plans to invite bids for the phase three expansion of its mini-mill project in Abu Dhabi has thrown the company’s proposed acquisition of the Shadeed Iron and Steel (Shadeed) plant in Oman into serious doubt.
When MEED reported that a rival bidder had entered the race to buy Shadeed in March, sources in the Gulf steel industry were still convinced that the move was brinksmanship on the part of the facility’s owners, the Abu Dhabi-based Al-Ghaith Holdings (AGH), and that ESI was still a firm favourite to secure a deal.
However, the rival bidder has now been confirmed as Indian steel giant, Jindal Group, and with due diligence to be completed at the end of this week (9 April), it is looks likely that ESI has resigned itself to missing out on the plant.
The Shadeed acquisition makes business sense because of its geographical location on the Gulf of Oman and the fact the plant has already started being commissioned. ESI has carried out due diligence and made a firm offer for the facility, while Jindal has until 21 April to submit its offer and until 7 May to conclude a deal. Industry reports suggest that the two offers will not be significantly different.
ESI is advancing plans to increase its steel production to 6.5 million tonnes a year, so even if it does lose out on the Shadeed deal, it will able to expand production capabilities closer to home in Abu Dhabi, where ESI is the master of its own destiny.