(MENAFN- Khaleej Times) Abu Dhabi's state-owned industrial group, the General Holding Company or Senaat, in a joint venture project with Japan's steel maker JEF and trading giant Marubeni-Itochu Steel Inc., will set up a mega pipe manufacturing facility investing Dh1 billion.
"The financial close on the project will be achieved in the second quarter of the year, while ground-breaking will be done in the third quarter," said Jamal Salem Al Dhaheri, chief operating officer of the General Holding Company or Senaat, while talking to media.
The pipe manufacturing project is part of Dh5 billion investments, in to expanding Senaat's industrial capabilities and output, which was announced by its chairman Hussain Al Nowais, this week.
Abu Dhabi is planning to develop a world class steel cluster through partnerships and investing in strategic industrial assets in Abu Dhabi to expanding into manufacturing away from oil.
The new project will be setup by a joint venture company named Al Gharbia Pipe Company to manufacture large-diameter sour grade welded steel pipes, which are used by oil and gas and construction industries, with consumptions soaring strongly. Sour grade pipes are designed to prevent corrosion associated with hydrogen sulphide environment, a characteristic of offshore operations.
Senaat will have a majority interest of 51 per cent share in the company, while Japan's two companies JFE Steel Corporation and Marubeni €Itochu Steel Inc or MISI will be minor partners in the project with 27 per cent and 22 per cent interest, respectively.
The project will be setup in Abu Dhabi's Khalifa Industrial Zone in Taweelah, which would have an annual manufacturing capacity of 240,000 metric tonnes of steel pipes to meet the local consumption as Shah sour gas project in Abu Dhabi has created a huge demand for it. Jamaal Salem Al Dheheri, the chief operating officer said the total imports of long diameters welded pipes in the Middle East is over one million metric tonnes per annum and Gharbia Pipe will meet 60 per cent of the domestic demand while remaining output would be exported to the Mena region.
Senaat which has its own mega steel manufacturing company in Abu Dhabi will import steel sheets from JEF which will moulded into industrial pipes.
With a total investment of Dh1.1 billion, the new joint venture will leverage JFE Steel's know-how for high quality welded steel pipes, MISI's sales networks and Senaat's presence in Abu Dhabi, which is looking to drive the contribution of the manufacturing sector in gross domestic product up to 25 per cent by 2030, in line with Abu Dhabi 2030 Vision, Al Dhaheri said.
On raising the funds for the project, the chief operating officer was confident that it wouldn't be an issue as there's a good appetite for such projects as banks are willing to invest in such projects.
Led by a growing energy demand and increasingly stringent quality specifications as well as an industry heavily dependent on imports, Gharbia Pipe Company will address the largely unmet demand for high-quality steel pipes.
Once operational, the pipe company will join the ranks of only a handful of other companies in the world capable of producing products of similar scale and quality.
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