CAIRO (Egypt) - ArcelorMittal, the world's largest steelmaker, said yesterday it would invest up to $1bn in Egypt after winning a licence to build direct reduced iron (DRI) and billet steel factories.
ArcelorMittal, which will pay 340m Egyptian pounds ($61.2m) for the licence, beat India's Essar Global and Al Ghurair of the United Arab Emirates in the auction.
“The bid was intense. It was about 81 rounds,” Arcelor Mittal Executive Vice President Sudhir Maheshawri told Reuters.
“The project will cost between $800m to $1bn,” he said, adding it would take up to four years for production to start.
Under the agreement, the production capacity of the factories is to be 1.6 million tonnes per year of DRI steel and 1.4 million tonnes of billet steel. The firm has the right to increase production by up to 30 percent.
Kuwait's Al Kharafi group also won a licence for pelletising factories for 105m Egyptian pounds, and Saudi Arabia's Al Tuwairqi Group won a similar licence for 64m pounds.
“The point of these licences is to lower steel prices in Egypt and boost the backward integration of the industry,” Amr Assal, the head of the Industrial Development Authority, told a news conference after the auction.
Egypt, the Arab world's most populous country, went from importing 2 million tonnes of steel annually less than 10 years ago to becoming an exporter of 900,000 tonnes in 2006, the trade and industry ministry has said.
The Industrial Development Authority said Egypt's 2006 steel production stood at 5.4 million tonnes. The International Iron & Steel Institute (IISI) said Egypt's crude steel output was 6 million tonnes in 2006.