Bahrain-based steel investment firm Foulath has said it is looking at investments of $3 billion to $5 billion in a mining company to complete the gap in its steel integration plans.

Its managing director Khalid Al Qadeeri also said the company planned to broaden its shareholding and would hold an IPO at a time yet to be determined.

Commenting on plans for acquiring a stake in a mining firm, the official said: 'We will go for a consortium. We wish to take a major stake.'

Al Qadeeri said the search for acquisition was not helped by uncertain conditions in the aftermath of a global economic recession and the overall caution with regards to stakes in mining firms. Currently the only missing link in the integration chain was mining but that was 'an investment that would be costly for all.'

Foulath also plans to build in collaboration with strategic investors two iron pelletisation plants in Egypt and one in Oman, each having a production capacity of 7 million tonnes.

Al Qadeeri indicated that the Arab spring had disrupted progress in those projects.

Currently, Foulath operates Gulf Industrial Investment Company (GIIC), which produces iron pellets, and United Stainless Steel Company (USCO), a cold-rolled stainless steel mill. Both plants are located in Bahrain’s Hidd Industrial City. The annual production capacity of GIIC is 12 million tonnes while that of USCO is 100,000 tonnes. A $1.2 billion plant comprising a direct reduced iron unit, a melt shop and a heavy section rolling mill is under construction near the first two facilities. The plant will be operated by United Steel Company (SULB) and will be the Middle East’s first producer of medium and heavy beams and structural steel sections.

Al Qadeeri commented on Foulath’s aspirations at a signing ceremony for the award to Bahrain’s Nass Contracting WLL of a civil integration package for the SULB plant.

Completion in H2, 2012

The SULB plant, a joint venture between Foulath and Japan’s Yamato Kogyo Co Ltd, is set for completion in the second half of 2012. It comprises a direct reduced iron (DRI) plant with a designed capacity of 1.8 million tonnes per year (mtpy), a melt shop (1.2 mtpy) and a heavy section rolling mill (1 mtpy). Kobe Steel (Japan) and Midrex of the US are building the DRI plant while Germany’s SMS Meer and SMS Concast with Korea’s Samsung Engineering will construct the melt shop and the medium and heavy sections rolling mill. Foulath holds 51 per cent of SULB’s shares and Yamato Kogyo 49 per cent.

Foulath, the holding company, has Gulf Investment Corporation of Kuwait as its main shareholder with 50 per cent of the shareholding. Qatar Steel holds 25 per cent while three Kuwaiti companies – MA Al Kharafi & Sons, the National Industrial Holding Group and the Kuwait Foundry Company – own the remainder shares.

Al Qadeeri estimated that SULB’s total capacity would take care of 20 per cent of imports of 4 million tonnes of similar products into the region.

The official stressed that SULB was a low-cost plant and had a total cost advantage of $252 per tonne from various standpoints including operations and shipping compared to a similar facility built in China.

He thanked the Government of Bahrain led by King Hamad bin Isa Al Khalifa for its continued support to Foulath.