Abu Dhabi’s Emirates Steel is considering plans to start approaching banks and export credit agencies to fund the third phase of its expansion in the third quarter of the year, according to sources close to the deal.

The company has appointed Abu Dhabi Islamic Bank (ADIB) to advise on an Islamic finance tranche of the debt and work in cooperation with France’s BNP Paribas, which is also advising on the project. BNP Paribas was appointed financial adviser on the project in January. The breakdown of the new financing will consist of bank debt and export credit agency loans.

ADIB was one of the key banks in financing the 2010 deal to fund the second phase expansion of the Emirates Steel plant. It acted as one of the lead managers on the $367m Islamic finance tranche of the $1.1bn financing.

Phase three of the Emirates Steel development at Mussafah is expected to cost between $800m-$1bn and will involve the construction of a 1.4 million tonne-a-year flat steel plant. Although the expectation is that the financing will be launched by the third quarter, it may be later depending on progress with selecting contractors to build the project.

In late April General Holding Company, the Abu Dhabi government investment vehicle that owns Emirates Steel, said that the majority of its $1.58bn profit came from the steel business and its construction arm, National Petroleum Construction Company (NPCC).