Al-Tuwairqi plans steel pellet self-reliance

17/08/2009 00:00 AST

The private Saudi-based Al-Tuwairqi Holding Company will start production at a new steel complex in 2010 which would reduce its steel pellets imports to nil by next year, a senior company executive said.

The complex, with a production capacity of 2 million tonnes will raise to 3 million tonnes the steel billets production capacity of the group, which owns 76 percent of Al-Ittefaq Steel Products Company, one of Saudi Arabias three largest steel producers, said Faisal Al-Haddawi, a board member at the firm.

"This is part of our strategic plan to become a fully-integrated steel producer and will reinforce our position as the kingdoms largest private steel producer," he told Reuters in a telephone interview.

"We will commission the complex by 2010. We bought the land and the machinery. We are off with the project. Without this project we will need to import steel billets to meet the design capacity of our reinforced steel bar plants," he said.

The steel complex, which includes a pelletisation unit, a direct reduction unit and a melt shop, will be called the Arab Iron and Steel Company, which is 100-percent owned by family-owned Al-Tuwairqi Holding Company, he said.

Al-Ittefaq has a design production capacity of 3 million tonnes of reinforced steel bars per year, but it is currently producing only 1.7 million tonnes, Haddawi said.

"A fifth rolling mill unit of reinforced steel bar is ready to go but we expect to start commercial production in 2010. It has a capacity of 1.3 million tonnes, but it is not viable to start it now given the conditions in the market," he added.

"Right now we produce 1 million tonnes of steel pellets per year which partially caters for our current production of reinforced steel. Once we commission the commercial launch of the fifth rolling mill we will no longer need to import steel pellets," Haddawi said.

Al-Ittefaq competes with Al-Rajhi Steel and Hadeed, owned by Saudi Basic Industries Corp in the lucrative Saudi market, where the government is spending $400 billion from oil revenues to develop infrastructure as well as build new schools and universities.

The spending push by the government has helped many industrial firms in the kingdom to offset the repercussions of the global financial crisis on private-sector activity, which has been hammered by a slowdown in bank lending.

Al-Ittefaq recorded sales of 1 million tonnes in the first seven months of this year, which is up 15 percent compared with the same period a year earlier, Haddawi said.

"We exceeded our sales projections without having to export anything. It all came from the domestic market despite the high level of inventories we had last year and the competition by importers," he said.

Reuters