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Abu Dhabi 2016 | INDUSTRY & AGRICULTURE | INTERVIEW

TBY talks to HE Saeed Ghumran Al Romaithi, CEO of Emirates Steel, on the role the company is playing in diversifying the economy and growth expectations for the years ahead.

HE Saeed Ghumran Al Romaithi
BIOGRAPHY
HE Saeed Ghumran Al Romaithi is Emirates Steel’s CEO. He is a UAE national and holds a degree in electrical engineering from California State University. He has over 15 years of experience in the steel industry and has been with Emirates Steel since its inception. He commenced his career as a Production Engineer in Operations and progressed through the ranks to become the Senior Vice President of Operations. In July 2011, he was appointed as CEO to head the company into its next phase of business development and to solidify the firm’s position as an integral part of Abu Dhabi’s 2030 vision.

Today's steel market provides a challenge for many companies. How has Emirates Steel maintained its position in this environment?

The current steel market conditions are challenging and it is affecting the local and global steel sector due to the global overcapacity levels and flow of low-quality, cheap steel imports into the markets, specifically the MENA region. The major source of these imported materials is China. Emirates Steel has been working toward surpassing the challenging conditions by moving away from spot business transactions to more mature business models and responsible partnerships. The gradual growth in demand for sustainable steel products is almost guaranteed with all the current and planned projects in the country. In 2016, steel consumption is expected to grow to 3.1% in the MENA region, after stagnating at 72.1Mt in 2015 according to the World Steel Association. Emirates Steel expects an improvement in the market conditions and increased demand for steel after the stabilization of the region's construction sector with confirmed multibillion-dollar value infrastructure projects. The spending on construction and infrastructure projects by both the private and public sectors has maintained the country's steel demand. On the supply side, the UAE today has 4.65Mt of rebar capacity, installed 1.25Mt of section capacity, and 0.84Mt of wire rod capacity. Emirates Steel has sustained its position in the UAE domestic market through its approach in developing long term supply contracts to meet the market needs on time, with focus on customer service. Emirates Steel domestic market share currently stands at approximately 52%, while it continues expanding its export business, particularly for higher-value added products. The company reported sales of 1.82Mt of finished steel products in 1H2016 compared to 1.56Mt for the same period of 2015.

What role does the steel industry plays within the diversification of the UAE's economy

The steel industry is the backbone of any modern economy; it is an essential element for any industrialization and urbanization efforts, and is considered one of the indicators for healthy economy. In the UAE, the steel industry plays a crucial role in the country's development plans. Investing in heavy industries is essential for catalyzing and facilitating the development of smaller downstream industry segments and to fulfil the government's ambitions to develop a healthy industrial sector as outlined by the comprehensive economic plan known as Abu Dhabi 2030. Implementing this strategic vision of national importance will contribute to the country's progress, the development of industrial infrastructure, an increase in revenue sources of non-oil commodities, and the creation of additional employment opportunities within the industrial and associated services sectors. Emirates Steel's medium- and long-term plan is to support this national initiative and create further opportunities for downstream manufacturing industries.

What is your outlook for 2016?

Emirates Steel is the largest integrated steelmaker in the UAE. The company ranks as the 77th worldwide in terms of production capacity. Currently, Emirates Steel is implementing an ambitious strategic business development plan to increase its production capacity and diversify its product range. Emirates Steel commenced a major modernization and phased expansion program with a capital investment of approximately AED11 billion in its phase I and phase II, which resulted in a huge boost in capacity and production. In August 2010, the company finalized its long-term financing and secured in excess of $2 billion to finance its expansion plans and working capital needs from local, regional, and international banks, reflecting a real vote of confidence in its business. Phase I transformed the company from a simple steel re-roller to the first fully integrated steel manufacturer in the UAE and significantly increased the company's rolling capacity to around 2 million MTPA. The construction and installation of the Phase I expansion program was completed in June 2009. The Phase II expansion project involved the construction of a heavy and jumbo sections rolling mill, and resulted in increasing the output capacity to nearly 3.5 million MTPA, positioning Emirates Steel as a major producer of jumbo and heavy sections in the Middle East.