Emirates Steel agrees project financing and increases production

Emirates Steel, the largest integrated steel producer in the UAE and a strategic steel player in the Middle East steel industry, recently signed a US$1.1bn, seven-year project financing agreement with a consortium of seven conventional banks and two Islamic finance institutions.

Emirates Steel is a subsidiary of the Abu Dhabi Basic Industries Corporation (ADBIC), which is wholly-owned by General Holding Corporation (GHC), an Abu Dhabi Government-owned company.

The project finance debt was raised through a US$ 367mn Islamic facility and a US$ 733mn conventional facility, each of seven-year tenor.

The conventional banks consortium consists of the National Bank of Abu Dhabi, Union National Bank, First Gulf Bank, Bank of Baroda, Arab Banking Corporation, Al Khaliji France and Al Khalij Commercial Bank (Al Khaliji). The two Islamic finance institutions are the Abu Dhabi Islamic Bank and Al Hilal Bank. Natixis has acted as financial advisor and Denton Wilde Sapte as legal counsel on this transaction.

Meanwhile, the company increased its finished products output by 45.4 per cent during the first half of 2010 compared to the same period in 2009. Product sales increased 30 per cent.

According to figures released recently by the company, production of rebar grew by 26 per cent during the first half of the year, compared to the first six months of 2009; while the output of wire rod rose a significant 283 per cent. In May, Emirates Steel achieved one million man hours without lost-time injury. Exports of these products were more than doubled. The company sells around 80 per cent of its products to the local markets and the rest is exported to Jordan, Saudi Arabia, Kuwait, Oman, India, China, the Far East and Pakistan.

“This is a significant increase considering the downturn in local and regional markets,” said Carl Andersson, senior vice president of Operations. “The construction sector is the primary consumer of our rebar and wire rod products,” he added.

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