Emirates Steel Industries (ESI), wholly-owned by the government of Abu Dhabi, has started commissioning its new Dh802 million ($218 million) steelmaking plant at Mussafah.

The construction of the country’s first integrated steelmaking operation continues to advance with the commissioning of a world-scale plant that will produce steel billets, the raw material for ESI’s new state-of-the-art rolling mills, said a ESI statement.

The plant, which includes an electric arc furnace and a caster to mould the billets from the furnace’s molten steel, has a capacity to produce 1.4 million tons of steel per annum.

Hussain Al Nowais, chairman of ESI, said the company was steadily delivering on its vision to become a steel company with a production capacity of five million tons per annum.

“ESI is pioneering the way for the steel industry in the UAE and will achieve this vision through a series of expansion projects. This new steelmaking plant, with an estimated investment of Dh802 million, is a significant component of our overall backward integration plan and gives us a competitive advantage over many major steel players in the region,” Al Nowais noted.

“Once commercial production begins in May, the production of steel billets will displace much of ESI’s imported billets and also lower production costs by a significant amount,” he added.

According to him, ESI has raised rolling mill production capacity to two million tons per annum over the past year alone as part of the first phase of its expansion strategy.

Ahmed Al Dhaheri, ESI’s vice president for projects, explained that the production capacity of the steelmaking plant will be 1.4 million tons per annum.

“ESI will have the capability to produce billets of different qualities and grades and the flexibility to serve a wide range of customers with finished goods tailored to their needs,” said Al Dhaheri.

“ESI has been importing close to 1.2 million tons of steel billets a year from several countries,” said Saeed Al Romaithi, ESI’s vice president for production.

“The operation of the new steelmaking plant will reduce our reliance on imports and increase our share in the local market. The plant will also allow ESI to transfer billets directly from the caster to the rolling mills. This will reduce our energy consumption and increase efficiency in our operations,” he added.

Last year, ESI had signed a Dh2.5 billion deal with Italy’s Danieli & Company to execute a second vertically-integrated phase of its expansion, which will increase the operation’s steel production capacity to three million tons per annum by 2011.

The final link in the production chain will be commissioned later this year, with a plant that converts imported iron ore pellets into raw iron for the new steelmaking plant. The import facilities for the pellets became operational in February of this year.

ESI’s ambitious expansion plan addresses the region’s growing demand for steel and will increase output to 5 million tons per annum.

“The many strategic alliances that we are currently structuring with leading technology providers, coupled with our state-of-the-art facilities, will allow us to maintain our position at the forefront of the industrial sector,” he added.-TradeArabia News Service