Sources of Pride

What is the history of Qatar Steel and what have been some of your major achievements?

Over the past decade, Qatar Steel has transformed itself into a growth-oriented business entity. Since 2003, the company has gone ahead with many expansions, increasing capacities at all its production facilities: direct reduction (DR) is up from 0.75 million tons per annum (mtpa) to 2.25 mtpa, the electric arc furnace (EAF) increased from 1.2 mtpa to 2.15 mtpa, and the rolling mill (RM) is up from 0.70 mtpa to 1.5 mtpa, thereby increasing the volume of saleable products from 1.00 mtpa in 2003 to 2.58 mtpa in 2012. The subsidiary unit in Dubai was upgraded with a new bar rolling mill with a capacity of 0.30 mtpa, increasing the capacity of the wire-rod and rebar-in-coil mill from 0.18 mtpa to 0.24 mtpa. Over the years, the company has built its reputation on sound operational and management practices in various facets of its business. We have also acquired a number of accreditations for product quality, and launched a new corporate brand identity in April 2007, whereby QASCO became Qatar Steel with the pledge of making steel matter. Qatar Steel was the first known Qatari organization to have initiated Balanced Scorecard implementation at the start of the millennium. A decade later, it became the first Qatari company to be inducted for Strategy Execution into Palladium’s Hall of Fame, an international accreditation for excellence in strategic management practices. At present, Qatar Steel is the exclusive provider of steel to the State of Qatar, a source of national pride, and one of the major contributors to the non-hydrocarbon economy of Qatar. The company directly employs around 2,000 people across operating units in Qatar and the UAE, primarily providing long steel products to the regional market.

What effect has the rise in prices of raw materials had on Qatar Steel?

Input costs play a vital role in the steel industry globally, and not just for Qatar Steel. The metallic steel price movement makes a significant impact on the movement of finished product prices across the globe, being closely linked. For Qatar Steel, the oxide pellets that go in as a feedstock into our DR plant constitute around 60% of the cost of goods sold, such as rebar and finished products. Therefore, any volatile movement in these prices has a major impact on the bottom line unless the price escalation is well absorbed in finished product prices. The demand for construction steel in the GCC also plays a vital role in the finished product price movement in this region, which is historically higher than the global average. They have been supportive in absorbing increases in metal prices, excepting the recession period in the latter part of 2008 and in 2009, when demand dropped drastically. Finished product prices have been reasonably supportive. Qatar Steel also maintains its cost position as an integrated steel mill through operational excellence to derive competitive advantage in the market.

What is Qatar Steel’s target market?

Qatar Steel sells its finished products predominantly in the GCC. Its primary market for rebar is Qatar, which constitutes around 65% of its total rebar sales in the GCC, while wire rod is predominantly sold in the UAE and Saudi Arabia. The company maintains a market share of 13% to 15% in its core rebar business in the GCC, with a 98% share of the domestic market. The strategy has always been flexible with exports reflecting supply and demand dynamics. In essence, we maintain a presence in all export markets within the GCC with higher volumes of sales in major markets like Saudi Arabia and the UAE, but with a lower market share and lower sales volumes in smaller import-driven markets, such as Bahrain.

What role does innovation play in the steel industry?

Through constant innovation, Qatar Steel develops new technologies and processes, which result in increases in productivity, cost savings, and also significant reductions in carbon emissions and other pollutants. Qatar Steel’s focus on innovation extends to its by-products, including slag generated from EAF molten steel processing, oxide fines produced by the DR iron plant, and mill scale generated from caster and RMs. Instead of discarding these by-products, Qatar Steel reuses them to maximize their value and sells them on to customers for further use. Qatar Steel has created an R&D department to provide an impetus to research activities and to be pro-active in meeting market requirements as a leading integrated steel manufacturer in the GCC.

What investment efforts is Qatar Steel making in “frontier” markets?

Apart from fast-paced expansion in the operating unit in Qatar, we have also invested in a re-rolling unit in the Jebel Ali Free Zone in Dubai since 2003 that is producing rebar, wire rods, and rebar-in-coils. We have gone ahead with prudent investments within the GCC and in the MENA region totaling in excess of $550 million. This includes a new joint venture in Algeria, to be 51% owned by Algerian companies and 49% by Qatar Steel International—50% Qatar Steel and 50% Qatar Mining—for Phase I with a 2 mtpa long-steel capacity.

How do you go about developing the company’s human capital?

Qatar Steel recognizes its employees as the company’s greatest asset, and as such it views employee engagement and Qatarization as a critical component of success. Under the “Organization Development Program,” a number of initiatives are aimed at enhancing employee morale and introducing a corporate culture to create a spirit and sense of belonging.

What is your outlook for the industrial sector in Qatar?

The steel market in Qatar has been favorable over the past decade, especially during 2003-2008 when we saw an unprecedented construction boom. The outlook is positive with real GDP growth expected to come from the non-hydrocarbon sector in the coming decade. Qatar is making rapid progress with its formidable pipeline of infrastructure investments worth over $130 billion that will run through to 2020. These investments cover transport, logistics, and rail (Doha metro, long-distance rail, freight, and the Lusail people mover), as well as roads, new stadiums, hotels, and ancillary facilities. The impetus is on FIFA-related infrastructure development, and the steel industry will largely benefit through this period. Steel demand is expected to grow at a compound annual growth rate (CAGR) of 5% to 6% during 2013-2022, with supportive government spending and Qatar Steel prepared to meet this growing local steel demand.

What are the medium-term plans and goals of Qatar Steel?

It needs to consolidate its competitive position in the regional markets within the GCC. With no additional advantageous feedstock in Qatar in the medium term, the company will find new sources of growth and look for strategic investments by way of acquisitions and joint ventures in iron ore and steel-related products within the MENA region. We will continue to create value for our stakeholders through profitable growth from operating units in Qatar and Dubai and through our strategic alliances and investments.