Senaat, one of the largest industrial holding companies in the United Arab Emirates, entered into a joint venture with a consortium made of two of Japan’s leading companies in the steel sector, JFE Steel Corporation and Marubeni-Itochu Steel Inc (MISI), to establish Al Gharbia Pipe Company which will manufacture and sell large diameter high quality sour grade steel pipes that cater to the Construction and Energy sectors in the region. With operations expected to formally launch in 2018, Al Gharbia’s production capacity is set to reach 240,000 tons annually, around 40% of which will be exported to neighbouring markets in the GCC and greater Middle East as well as north and East Africa.
Led by a growing energy demand and increasingly stringent quality specifications as well as an industry heavily dependent on imports, Al Gharbia will address the largely unmet demand for high-quality steel pipes. Once operational, Al Gharbia will join the ranks of only a handful of other companies in the world capable of producing products of similar scale and quality. Sour grade pipes are designed to prevent corrosion associated with hydrogen sulphide environments, a characteristic of offshore operations.
Commenting on the new venture, Eng. Suhail Mubarak Bin Athaeeth Al Ameri, CEO of Senaat, said: “In striving to uphold our mandate of championing UAE industry and contributing to the nation’s diversification efforts Senaat will continue to expand its portfolio through global partnerships with leaders in their respective fields. The project not only meets a stringent demand at a time where being efficient in the oil and gas and other industries is more important than ever; but it is also symbolic of the strength and the calibre of the relationships that we are able to forge. Senaat has an established track record in bringing international know-how to the UAE and building local companies that can compete globally and Al Gharbia attests to that.”
With a total investment close to AED 1.1 billion, the new company will leverage JFE Steel’s know-how for high-quality large-diameter welded steel pipes, MISI’s sales networks and Senaat’s presence in Abu Dhabi, which is looking to drive the contribution of the manufacturing sector in GDP up to 25% by 2030. Al Gharbia will be located at Khalifa Industrial Zone of Abu Dhabi (KIZAD).
The Japanese Consortium holds a 49% stake in Al Gharbia. It participated in the joint venture under the Abu Dhabi-Japan Business Promotion Initiative of the Japan Cooperation Center for the Middle East. The initiative supports Japanese companies that invest in projects to strengthen ties between Japan and the UAE.
Commenting on the JV, Takafumi Nishiuma, Vice President of JFE Steel said: “The GCC region is highly competitive in terms of drilling costs and oil and gas reserves capacity. With the development and production of oil and gas forecast to remain robust across the region despite recent volatility, the demand for high-quality steel pipes for pipelines to transport these resources is expected to expand steadily; we see huge opportunities for investment in this market and particular in the UAE and believe Senaat is the ideal partner for us to expand our footprint in the region.”
Meanwhile, Koji Shimada, Executive Officer, COO Tubular Products Division of MISI, the leading Japanese trading company that is engaged in the processing, import, export, and sale of steel products, added: “Partnering with Senaat provides us with unparalleled access such a potential market and we see no better way to enter into such a venture than alongside one of the most respected industrial holding companies, and an experienced and proven investment partner at that.”
With 51% stake in Al Gharbia, Senaat demonstrates its commitment to grow the industrial sector and support the implementation of Abu Dhabi’s Economic Vision. Al Gharbia also illustrates Senaat’s commitment to empowering our Emirati youth and fostering a deeper involvement in the UAE industrial sector. Upon completion, Al Gharbia will offer 370 employment opportunities.
Eng. Jamal Salem Al Dhaheri, Senaat’s Chief Operations Officer, reiterated the Company’s efforts in identifying potential industrial investment opportunities, saying: “Senaat plays a key role in creating mega projects that act as catalysts for downstream private business ventures. Al Gharbia is established to complement our current businesses by creating value and synergy among existing investments. We adapted a holistic approach to identify the feasibility and sustainability of the project, as well as the selection of our strategic partners. The alignment between the partners was another crucial element where we spent quality time to ensure the success of this project.”
Through strategic partnerships and investing in industrial assets in Abu Dhabi, Senaat aims to develop a world-class steel cluster in Abu Dhabi and strengthen its steel manufacturing capabilities on par with global peers. Senaat has recently announced its plans to invest AED 5 billion in developing industrial projects over two years. Its portfolio companies benefit from Senaat’s unique ability to source innovation, create and grow businesses and provide proactive, strategic input through to commercial productivity. Senaat’s portfolio consists of Emirates Steel, National Petroleum Construction Company (NPCC), Arkan, Ducab, Agthia, Al Foah and Taweelah Aluminium Extrusion Company (TALEX).