Essar Group to Set Up Steel Plant in the Middle East

Essar Group to Set Up Steel Plant in the Middle East

Project Overview
In July 2006, The Essar Group expressed plans to establish three new steel plants in the Middle East region.
These include:
A 50:50 joint venture with Qatar Steel Co. to install a steel plant with an annual capacity of 1.5 million ton
Installation of a 1million ton per year capacity steel rolling mill on the outskirts of Sharjah, UAE
A 60:40 joint venture with undisclosed pension funds in Iran for constructing a 1.5 million ton per year capacity steel plant, where in the Essar Group holds a 60% share
Total installation cost of all the three plants is estimated at US$ 1,500 million. The development is in line with the company’s plans to increase its market share in growing markets that have a captive need. As steel production is a power intensive process the Middle East region became a natural fit for the company for installation of steel plants. Availability of cheap natural gas in Qatar and Iran shall drastically decrease the production cost for Essar, as energy accounts for 45% of the total production cost of steel. The cost of steel produced in these regions will be the lowest as compared to rest of the world. Further, large industrial projects being executed in the Middle East region have prodigiously fueled the demand for steel.
Project Initiation
As reported in July 2006, the company had acquired land for the project in Qatar, and had also arranged for debt financing. The company is negotiating with the Qatar government for supply of gas for the plant. The first phase of the project includes setting up of a hot briquetted plant at a cost of US$ 325 million. A steel rolling mill with annual capacity of 1.5 million tons for producing long products like rods will be established in the second phase at a cost of US$ 300-400 million. The installation process of the steel plant in Iran will be identical to that in Qatar. The rolling mill to be installed on the outskirts of Sharjah shall use steel billets imported from the company’s Indian operations. Installation cost of this plant is estimated at US$ 200 million.
Project Name
Essar Steel Plant in Qatar, Essar Steel Plant on the Outskirts of Sharjah, Essar Steel Plant in Iran
Location
Qatar, Sharjah, Iran
Commence
2006
Completion
Not Available
Estimated Investment
US$1500 million
Capacity
Qatar plant - 1.5 MTPA; Sharjah Plant - 1 MTPA; Iran Plant - 1.5 MTPA
Key Players
Qatar Steel Co., Essar Group