Bahrain-based SULB, the region’s first fully integrated steel sections and beams producer, marked the official signing of a $373million loan agreement between the company and BNP Paribas and Société Générale (SGCIB).
Funding will support the implementation of the project, which has a total investment cost of $1.4 billion, including the acquisition of Saudi Sulb.
SULB is a joint venture between Bahrain-based Foulath, the region’s leading steel investment vehicle and holding company (owning 51%), and Japan’s Yamato Kogyo Co., Ltd, a leading global sections and beams producer (owning 49%).
The signing ceremony was held in the presence of dignitaries and diplomats from across the region and internationally. It was also attended by representatives of the company and its shareholders, the lending banks as well as members of the Arab Iron and Steel Union, which are currently being hosted in the Kingdom of Bahrain by Sulb on the occasion of the meeting of its Board of Directors.
SULB’s planned facilities will consist in Phase I of a Direct Reduced Iron Plant (DRI Plant) with nameplate capacity of 1.5 million tons per year (mtpy), a Melt Shop (MS) with nameplate capacity of 1 mtpy and two Rolling Mills with a total capacity of 1.2 mtpy for the production of light, medium and heavy sections and beams. Sulb is contemplating in Phase II, a Melt shop with additional nameplate capacity of 1 mtpy and a Rebar Mill with an annual capacity of 600,000 tons.
The plant’s start up is planned for August 2012 and once fully operational it is expected to replace approximately 20 percent of the current imports of medium and heavy steel sections into the regional markets. SULB and Foulath’s other investee companies will together employ approximately 2,000 workers, of which about 60% are Bahraini nationals with a target to achieve 70% Bahrainization.
“We would like to extend our appreciation to BNP Paribas and Société Générale for providing SULB with this important loan facility. They have shown their trust in SULB’s shareholders and the robustness of the project as well as their confidence in the Kingdom of Bahrain,” Khalid Al-Qadeeri, Chairman and Managing Director of SULB, said.
“We are especially pleased to have concluded this agreement in light of the current economic and political environment in the region and globally. I would also like to thank Foulath’s shareholders Gulf Investment Corporation (GIC), Qatar Steel, National Industries Group, Al-Kharafi Group and Kuwait Foundry for their strong support of SULB. Alongside Yamato, they have contributed 70% of SULB’s equity. Their commitment to this project, along that of our lending institutions, will see SULB emerge as a market leader in the region and an important source of high quality steel products to support ongoing growth and infrastructure development across the GCC and MENA markets,” he said.
“BNP Paribas are delighted to have played a role in supporting Sulb in this very important project, which will benefit not only Bahrain but the wider Middle East Region. As a Bank we are committed to supporting the local economies in which we operate,” Jean-Christophe Durand, Head of BNP Paribas Middle East and Africa, added.
“Société Générale is particularly proud to have contributed to the success of this landmark transaction. It must be admitted that the economic and political circumstances that we’ve gone through locally as well as in Europe have made the process longer and more complex than initially anticipated. We have, however, been firmly convinced of the intrinsic merits of the SULB project and the respective strengths and expertise of its two shareholders, Foulath and Yamato Kogyo. We would also like to express our gratitude to the three export credit agencies involved in the transaction – Hermes and SERV in support of SMS equipments and KSure in support of Samsung deliveries – which have proved to be of the utmost importance in the closing of the deal,” Xavier Robert, Managing Director SGCIB Export Finance, said.
SULB’s facilities are being established within Foulath’s existing 1.3 million square meter state-of-the-art steel production complex located in Bahrain’s Hidd Industrial Area. Sulb will be situated adjacent to GIIC’s pelletizing plants and USCO’s cold rolled stainless steel mill, both wholly owned subsidiaries of Foulath. Sulb is being implemented by two world-class consortiums. The first is Kobelco of Japan and Midrex of the US. The second is comprised of SMS Meer and SMS Concast of Germany and Samsung of Korea.