Sulb closes $373m loan deal.

UNITED Steel Company (Sulb) has signed a $373 million loan agreement with BNP Paribas and Societe Generale (SGCIB) for implementation of a major steel plant coming up in Bahrain's Hidd Industrial Area.

The Sulb project involves a total investment of $1.4 billion including the acquisition of Saudi Sulb, a steel company operating from Jubail in the Saudi Eastern Province. Sulb is a joint venture between Bahrain-based Foulath (51 per cent) and Japan's Yamato Kogyo Company, a leading sections and beams producer. The loan will help Sulb complete its facilities including a direct reduced iron plant with a nameplate capacity of 1.5 million tonnes per year (tpy), a melt shop with a nameplate capacity of 1 million tpy and two rolling mills with a total capacity of 1.2 million tpy and capability to manufacture light, medium and heavy sections and beams.

Start-up is planned for August of this year. Once fully operational it is expected to replace some 20 per cent of current imports of medium and heavy steel sections in regional markets. The Sulb plant and other Foulath companies will employ around 2,000 workers, 60 per cent of whom will be Bahrainis initially. In its second phase, a melt shop with an additional nameplate capacity of 1 million tpy and a rebar mill with annual capacity of 600,000 tonnes is planned. Chairman and managing director of Sulb Khalid Al Qadeeri said BNP Paribas and Societe General had demonstrated trust in Sulb's shareholders, the project itself and Bahrain. "We're especially pleased to have concluded this agreement in light of the current economic and political environment in the region and globally," he added. Foulath's shareholders are Gulf Investment Corporation (GIC), Qatar Steel, National Industries Group, Al Kharafi Group and Kuwait Foundry. Al Qadeeri said Sulb would emerge as a regional market leader and an important source of high-quality steel products to support ongoing growth and infrastructure development across the GCC and Mena markets.

Jean-Christophe Durand, head of BNP Paribas Middle East and Africa, said his organisation was committed to supporting local economies in which it operated. Xavier Robert, managing director, SGCIB Export Finance, said the economic and political circumstances occurring locally and in Europe had made the Sulb transaction process "longer and more complex than initially anticipated." He said his firm was firmly convinced of the intrinsic merits of the Sulb project and the strengths and expertise of its shareholders. "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 equipment and KSure in support of Samsung deliveries -- which proved to be of the utmost importance in closing the deal," Robert added. The Sulb plant is being established within Foulath's existing 1.3 million sq m state-of-the-art steel production complex. It lies adjacent to Gulf Industrial Investment Company (GIIC)'s pelletising plants and the United Stainless Steel Company's cold rolled stainless steel mill, both wholly owned subsidiaries of Foulath. Sulb is being implemented by two world-class consortiums, the first being Kobelco of Japan and Midrex of the US and the second being Germany's SMS Meer and SMS Concast and Korea's Samsung. Al Qadeeri said GIIC would benefit from additional iron ore shipped from two mines in Brazil in 2013. An additional 15 million tonnes would be made available from CSN for use by two upcoming pelletisation plants in Egypt and Oman, both of which were now on hold.

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