Sulb close to buying Union Gulf Steel

15 December 2010

Kuwaiti/Japan joint venture close to securing deal for 450,000 tonne-a-year rolling mill in Saudi Arabia

The Kuwaiti/Japanese joint venture behind Bahrain’s $1.2bn Hidd Steel Mill project is close to acquiring the 450,000 tonne-a-year (t/y) United Gulf Steel (UGS) rolling mill in Saudi Arabia.

The United Steel Company (Sulb) chairman and managing director, Khalid al-Qadeeri, says that the deal was in the final stages of due diligence and the transaction should be completed soon.

Middle East steel demand 2010*
Saudi Arabia22
Other GCC8
*=Percentage of 43.92 million tonnes. Source: Metal Bulletin

“We have reached an agreement with the lenders regarding finance so things are going smoothly,” says Al-Qadeeri.

UGS is currently in operation, but due to a lack of both working capital and raw materials it is only producing 20 to 30 per cent of capacity. Al-Qadeeri adds that Sulb will ramp up production as soon as the transaction is complete.  

“When we acquire it, we will bring in raw materials from [Japan’s] Yamato [Kogyo Company] and Qatar Steel,” he says. “This will help out in the short term, but when Hidd in Bahrain is complete we will ship billets on barges to supply the plant.”

The Hidd Steel Mill is being constructed by Sulb, a joint venture of the Bahrain-based United Steel Holding Company (Foulath) and Yamato Kogyo Company (MEED 30:5:10).

Al-Qadeeri also reveals that Sulb is looking to expand into the production of steel rebar and is carrying out a study for a new facility at an as yet undefined site in Kuwait, which would have a capacity of at least 500,000 t/y.

“We are looking at Kuwait because it is close to the Iraq market Kuwait,” Al-Qadeeri says. “We will have a surplus of raw materials that we will want to utilise. A study is being carried out and we will make a decision soon.”

Kuwait’s Gulf Investment Corporation (GIC) owns 50 per cent of Foulath, 25 per cent is owned by Qatar Steel, 10 per cent each is owned by the Kharafi Group of Kuwait and the National Industries Group of Kuwait, and 5 per cent by the Kuwait Foundry Company.

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