New steel plant focused on car industry to be built in Abu Dhabi

31 March 2015

Abu Dhabi is set to get a new steel plant targeting the automotive industry.

Abu Dhabi Ports has signed an agreement with a unit of FourWinds Group of Companies to build a steel foundry to produce automotive parts at Khalifa Port’s Industrial Zone (Kizad), the port firm said.

The foundry, which will manufacture parts such as brake disks and callipers, will eventually have a capacity of 300,000 tonnes per year, making it one of the largest single-source foundries in the world producing car parts, a company statement said.

Germany’s automotive parts maker Continental Teves has agreed to buy the full output of the first production line.

Advanced Manufacturing Solutions (AMS), a unit of FourWinds, will build the foundry, which will be constructed over three phases. Phase I, which will cost Dh514 million, will have an installed capacity of 75,000 tonnes per annum and will produce grey iron for brake discs and ductile iron for brake callipers. Phase II is intended to boost capacity to up to 145,000 tonnes per annum and Phase III will reach 300,000 tonnes per annum. The statement did not say when the plant would be completed, or how much it would cost in total.

The production from the foundry will be for local and international markets. Exports from Khalifa Port will be used by major marques such as BMW, VW, and Mercedes-Benz and makers of car parts.

“The automotive sector in the UAE has been experiencing double-digit growth over the past few years, and having a locally-based auto parts and accessories foundry, supports this industry and its growth within the emirates and the region,” said Captain Mohamed Juma Al Shamisi, the chief executive of Abu Dhabi Ports. “In addition, the proximity to Khalifa Port will enable AMS to reach its international customer network quickly and cost-effectively.”

The steel foundry is one of several investments the firm plans to undertake in Abu Dhabi, the ports company said.

FourWinds, a unit of Tharwa Investments, focuses on investments and projects in infrastructure, industry, natural resources and real estate.

The agreement with AMS is one of a series of initiatives in Abu Dhabi to boost the contribution of the non-oil sector to the economy, create downstream industries and jobs.

According to the Abu Dhabi Economic Vision 2030, the non-oil sector is expected to contribute 64 per cent of GDP by 2030.

Non-oil activities contributed 45 per cent to the Emirate’s GDP in 2013, versus 43 per cent in 2013, according to the Economic Report of the Emirate of Abu Dhabi 2014.

Investment in steel manufacturing is on the rise in Abu Dhabi. The Senaat conglomerate plans to develop a Dh1.1 billion steel plant that will create 370 jobs in Kizad.

Senaat has entered into a joint venture with two Japanese steel makers, JFE Steel and Marubeni-Itochu Steel, to build steel pipes for industrial use.

The new company, Al Gharbia Pipe, will reduce the country’s reliance on steel pipe imports while exporting 40 per cent of its production, Senaat executives said this month.

Tharwa FourWinds also this month signed an initial agreement with the Egyptian Electricity Holding company to build a 6,000MW coal-fired plant in the North African country at a cost of US$11bn.

FourWinds Capital Management, the financial services and asset management arm of FourWinds Group, also launched a $1bn fund dedicated to infrastructure investments in Egypt.

The deals were signed at an investment conference in Sharm El Sheikh in Egypt this month.