DOHA: Metalloinvest, the Russian steel and iron ore firm controlled by billionaire Alisher Usmanov, plans to invest $320 million in five years to build its second mill in the United Arab Emirates, a company executive said on Wednesday. In 2007, Metalloinvest invested around $160 million to build the Hamriyah Steel rebar plant in the northern emirate of Sharjah which has a capacity to produce one million tons of rebar per year. "We have already booked land in Sharjah next to our existing plant there and we are looking at building a new plant which will need an investment of around $320 million," said Shukhrat Nishanov, general manager of Hamriya Steel. The new plant will produce direct reduced iron (DRI), which is used to make steel, said Nishanov. "We will probably be looking for a partner to work with on this project, but for now we are just waiting to the effects of the economic crisis to lessen before we take steps," he added. Hamriyah Steel, is an 80-20 joint venture project with Metalloinvest owning the majority stake, while the remainder is owned by Sheikh Sultan bin Khalifa Al Nahyan, a member of the ruling family. The plant started production in February this year and is now producing around 1,000 tonnes of rebar per day, said Nishanov. "We expect that we'll reach full capacity of 1 million tons by February 2011." So far the mill's production was sold to in the UAE and Saudi Arabia and once production is ramped up to full capacity more markets in the Middle Eas such as Iraq will be targeted, said Nishanov. Metalloinvest, Russia's fifth largest steel maker operates Russia's two largest iron ore mines, Lebedinsky GOK and Mikhailovsky GOK, as well as the Ural Steel plant and the Oskol Electrometallurgical Plant (OEMK). "Our company in Russia is a very large producer of iron ore so all of the feedstock required is shipped direct from Russia and we don't have to rely on other countries or companies to supply us," said Nishanov, adding that over 60,000 tons of feedstock is already in storage at the Hamriyah plant. Last month, steel producers in the Gulf region were wary of a surge in iron ore prices after the world's top three iron ore miners Brazil's Vale, BHP Billiton and Rio Tinto — who have the upper hand in the $80 billion iron ore business pushed for a revamp of the decades-old annual benchmark system. "Right now I think the biggest concern for the market is volatility in prices but we see that demand in the Middle East is still strong," said Nishanov. Spot iron ore prices fell below $150 a ton this week for the first time in two months amid weakening demand from China, the world's largest user of the commodity.
