Ezz Steel, Egypt's largest steel producer, said on Sunday it was investing $475 million to set up a new billet production line and a direct reduced iron (DRI) plant.

The firm will invest $75 million in a new billet production line to be located at its flat steel plant in Suez, east of Cairo, and $400 million in a new facility to make DRI also in Suez, Kamel Galal, head of investor relations, told Reuters.

Billets are sections of steel used in construction that can be rolled into bars, rods and sections. DRI is mostly consumed by steel mills to improve the quality of their final product.

'The billet production will increase the flexibility of our flat steel plant as at any point in time when demand for flat steel is down it will enable us to operate the facility at full capacity,' Galal said by telephone.

Ezz Steel's flat steel plant has been shut since November as a result of declining global and domestic demand for flat steel.

The new billet line is set to produce 1.2 million tonnes of billet a year and will start up in the first quarter of 2010.

The DRI plant will have a capacity of 1.8 million tonnes a year and is set to start in the second half of 2011.
    'The DRI plant is mainly for backward integration for our production process,' Galal said.

Ezz Steel last week reported a 90 percent drop in net profit in the first half of 2009 but said local demand remained strong. Its first-quarter profits were also down 85 percent, which it blamed on declining steel prices and weak export markets. - Reuters