The world's number one steelmaker ArcelorMittal has announced the acquisition of a license from the Industrial Development Authority (IDA) of Egypt's Ministry of Trade and Industry to construct a steel plant in Egypt.
At the auction for the license, ArcelorMittal beat India's Essar Global and Al-Ghurair of the United Arab Emirates with a winning bid of approximately $60 million. The total cost of the investment for the project will be around $1 billion.
Under the terms of the license, the plant will produce 1.6 million mt of steel using DRI technology and 1.4 million mt of billets through the EAF method. The company will also have the right to increase its capacity by up to 30 percent.
Construction of the plant, which will be located close to the northern Red Sea coast, is expected to start in 2009.
Commenting on the license, Aditya Mittal, CFO and member of the ArcelorMittal Group management board, said, "This project forms part of our three-dimensional growth strategy to look for opportunities to expand our business in the three key areas of geography, product and value chain. The Middle East is a growth market for the steel industry and it makes sense for ArcelorMittal to expand its presence in the region."
Kuwait's Al-Kharafi group also won a license for pelletizing factories for $19 million, whereas Saudi Arabian Al-Tuwairqi Group won a similar license for $11.5 million.
The added capacities in Egypt, which is the Arab world's most populous country, is foreseen to ease rebar prices, providing relief for the real estate and housing sectors.
According to Egypt's Trade and Industry Ministry, the country became a net exporter of 900,000 mt of steel in 2006, from its earlier position as a net importer of two million mt per annum 10 years ago.