Qatar Steel signs two deals to fund expansion plans

Qatar Steel Company yesterday signed two major agreements with a 17-bank consortium to fund the expansion of its steel plant operations.

The agreement are a $483.5 million (Dh1.77 billion) term facility and $75 million (Dh275 million) standby facility to expand Qatar Steel Company's (Qasco) plant in Mesaieed Industrial City, south of Doha.

Addressing a press conference here yesterday, the management of the company, a wholly owned subsidiary of Industries of Qatar, said the financing marks a significant milestone in the company's growth.

Expansion plans include introducing a new direct reduction plant to annually produce 1.5 million tonnes of iron to bring production up to 2.3 million tonnes.

It also envisages increasing molten steel production from 1 million tonnes to over 1.5 million tonnes annually and doubling the rolling capacity by installing a new rolling mill to increase production to over 1.5 million tonnes annually.

Detailed design and engineering for the project is already in progress and civil works have started, a statement by Qasco said.

The 17 bank lending group consists of a mix of local regional and international banks. First drawdown of the facility is expected shortly. Completion of the project is scheduled in July 2007.

Shaikh Nasser Bin Hamad Al Thani, Qasco's general manager, earlier said the company produced more than 1.1 million tons of loose iron and 800,000 tonnes of reinforced steel in 2004.

The UAE is the biggest purchaser of Qasco's products, followed by Saudi Arabia, although about half of Qasco's total production is absorbed by the Qatari market.

Shaikh Nasser also said that Qasco is looking at Iraq as a new potential market.

He said competition by other GCC producers is welcome, as the company is confident in its experience and quality of products.

"We manufacture a variety of products now, including hot rolled deformed bar which has been produced for the first time in Qatar."

He added that steel prices could rise during the current year due to a 40 per cent hike in the prices of raw materials, in addition to the weakening of the dollar.

However, he said that the price of steel produced in Qatar is still competitive.

The 17-bank lending group consists of a mix of local, regional and international banks.