Abu Dhabi’s Emirates Steel will approach banks for a long-term project financing deal in March, according to sources close to the company.

The deal will be launched to refinance a $700m bridging loan that matures in August 2010.

The size of the facility has yet to be confirmed but could be about $1.5bn. The funds will be used to expand Emirates Steel plant at Taweelah.

“There is still the requirement for more funding to finish off the next phase expansion of the Emirates Steel project, so a much larger facility will be raised this year,” says one banker close to the deal.

Emirates Steel is being advised by France’s Natixis, which also arranged the $700m bridging loan.

A large number of banks provided the bridging loan, including National Bank of Abu Dhabi, Union National Bank and First Gulf Bank, all local.

The international banks included Bahrain’s Arab Banking Corporation, Qatar’s Al-Khaliji, its subsidiary BLC Bank (France), India’s Bank of Baroda, the UK’s HSBC, France’s Natixis and Germany’s HVB/Unicredit Group.

The bridging loan was arranged in May 2008 and was due to mature in November 2009, but this was extended in October 2009 because the constrained financing market meant it was too difficult to raise long-term finance at the time (MEED 06:10:10).