$5bn steel producer set up

STEEL DEMAND: New firm set up to boost supply of construction materials in the region. (Getty Images)

Bahrain's Gulf Finance House said on Wednesday it would set up a $5 billion steel firm with partners to help meet growing demand for construction materials in the region.

HadeedMENA would have initial capacity of eight million tonnes of steel per year for the next four years, Gulf Finance said in a statement, without clarifying whether the production would take place at one or more plants.

It said output could reach 12 million tonnes of steel in the future, the company said in the statement, without giving a specific timeframe.

While upstream production will be located in countries rich in iron ore and coal, downstream activity will focus on countries that have high demand for the metal in the Middle East and North Africa region.

Global rebar consumption reached 218 million tonnes last year. Around 65-70 percent of consumption comes from the Middle East and Asia while the highest consumption per capita is in the UAE.

Demand for iron and steel in the world's biggest oil-exporting region could climb more than 30 percent to 19.7 million tonnes this year, according to the Gulf Organisation for Industrial Consulting.

The total value of civil projects in the Gulf is estimated at around $1.5 trillion, and demand for housing is expected to soar on robust population growth, particularly in Saudi Arabia, analysts have said.

"It [HadeedMENA] will focus both on upstream production for steel billets as well as downstream manufacturing of steel rebars and structures," Gulf Finance's chairman Esam Janahi said in the statement.

Other partners in the venture are Emirates International Investment Co, Khaleej Development Co, Q-Invest and First Energy Bank.

Gulf Finance operates according to Islamic law. (Reuters)

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