Emirates Steel tenders phase 3 expansion

02 August 2011

Contract to be awarded by January 2012

Abu Dhabi’s Emirates Steel Industries (ESI) has launched the tender for the third phase of its plant in Mussafah.

ESI launched the invitation to bid (ITB) for the 1.4 million tonne-a-year (t/y) flat steel plant on 28 July. The contract for the purchase of the technology and the construction of the plant will be awarded by January 2012.

“There will be three months of technical preparations and one additional month of technical reviews. In parallel to that, there will be one month of commercial reviews. After that, there will be one month for clarifications and the award. So we’re talking end of December, or possibly January,” says a source close to the project.

The tender was sent out to technology providers, who will bid jointly with a chosen engineering, procurement and construction (EPC) contractor. The technology providers are Italy’s Danieli, Japan’s Mitsuibishi, Siemens Vai and SMS Semag, both of Germany, Japan’s Steel Plantech and Italy’s Tenova.

The ITB comes after the company issued a request for proposals (RfP) for the project’s financial advisor. (MEED: 08:07:11) A group of banks including UK’s HSBC and Royal Bank of Scotland, France’s BNP Paribas and Natixis, Germany’s Deutsche Bank, and National Bank of Abu Dhabi were asked to submit their pitches by the end of July. ESI is expected to make a decision by the middle of August.

The RFP documents indicate the cost of the project at between $800m-$1bn.

The tender ends a period of specualtion about how and when the project would proceed. Initially, there was uncertainty over the location of the plant with two options being considered for the the location, one in Taweelah, the other in Mussafah. More recently, the future of the project was questioned by industry sources following the departure of the company’s chief executive officer (CEO).

The documents stipulate the new plant will be built at the Industrial City of Abu Dhabi (ICAD) in Mussafah, site of ESI’s phase 1 and 2 facilities. This ended speculation that Phase 3 could be built in the emerging Khalifa Industrial Zone Abu Dhabi (Kizad) in Taweelah.

The departure of CEO Gregor Munstermann from the company is likely to have caused further delays. Munstermann confirmed he will be leaving the company on 31 August to set up a consultancy focusing on the steel industry.

“The change of management […] was one of the issues that created the delay,” said the source.

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