Italian foundry equipment maker Danieli has won a $1 billion contract to expand a steel plant in Abu Dhabi, the plant owner said.

Abu Dhabi state-owned General Holding Corp (GHC) said in a statement the deal was part of a $4.5 billion plan to expand its Emirates Steel Industries plant.

The deal will be 70 percent financed through borrowing, GHC said in the statement, adding that it had approached banks and financial institutions for loans. It did not give further details.

The second-phase expansion of Emirates Steel Industries will increase capacity to 3 million tonnes per year from the current 2 million tonnes, the company said.

"Emirates Steel Industries will become, on completion of the current expansion projects within four years, one of the largest steel producers in the region with total investments exceeding $4.5 billion," Sheikh Hamed bin Zayed al-Nahayan, chairman of GHC said in the statement.

"The agreement signed today reflects the strategy of Abu Dhabi to promote basic industries and transforming the emirate into a regional industrial hub."    

The expansion includes building a new direct reduction plant, a steel melt shop with continuous casting for production of steel billets and beam blanks as well as a steel rolling mill.

Work would start immediately and full commercial production was expected to start by the first quarter of 2011, it said. -Reuters