GCC countries investing $18 bn on 46 steel plantsJune 9th, 2008 - 9:41 pm ICT by IANS
Dubai, June 9 (IANS) The Gulf Cooperation Council (GCC) countries are investing $18 billion to build 46 steel plants to meet growing demand amidst the massive construction boom in the region. Leading the way is Saudi Arabia with 17 plants and the United Arab Emirates (UAE) with 16, state-run Emirates News Agency (WAM) reported, citing recent industry research.
Six of the remaining 13 plants are to be located in Oman, four in Bahrain and three in Qatar.
These five countries, along with Kuwait, form the six-member GCC.
According to the report, the price of structural steel has recently risen by 15 to 25 percent despite a decree issued by Vice President and Prime Minister of the UAE and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum exempting cement and reinforced steel from customs duties until further notice to maintain the momentum of investments in property development.
Real estate developers are calling for other measures to protect them from brokers, hoarding and black market speculation, and to allow them to import cement and reinforced steel without restriction so that they can overcome the soaring prices.
The hike in the price of reinforced steel is not limited to Dubai or the UAE, but is a trend throughout the GCC countries.
The reasons for this are the real estate boom and the recycling of surplus petrodollars, much of which is taking place in the real estate sector, the safest and fastest growing investment channel in the regional markets.
“The GCC countries have started addressing this issue, with more than $18 billion being invested in 46 steel manufacturing plants throughout the Gulf in an attempt to close the widening gap between supply and demand for steel, a major component for the construction industry,” the WAM report quoted Fakhruddin of Fakhruddin Properties, as saying.
He added that these projects indicate aggressive growth in the industrial sector, in line with the five-year real estate boom.
“The current flow of real estate projects, coupled with the expectations that this trend will continue in the region over the coming two decades, led us to seriously consider possible investment in steel projects, bearing in mind that we would need to bridge the current gap between supply and demand, while avoiding a situation of oversupply of these materials in the future once a balance has been established in the real estate market,” Fakhruddin said.
The UAE is investing $2.2 billion to build the region’s three largest steel plants.
The first of these is a $1-billion plant in Fujairah with a production capacity of 1.5 million tonnes per year; the second is a $600 million Boulder Project in Hamriya with a capacity of 175,000 tonnes per year; and the third that will also be built in Hamriya and for which studies are currently underway, is also valued at $600 million.
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