Nippon Steel announced on Thursday the firm reached agreement with shareholders of hot dip-galvanizing steel maker, Al Ghurair Iron & Steel (AGIS) of United Arab Emirates to purchase 20% voting right in AGIS for around 2 billion yen. Nippon Steel supplies more than 200,000 tonnes per year of hot rolled coil for the maker of UAE’s major conglomerate, Al Ghurair Group.
Nippon Steel signed share purchase agreement with Al Ghurair Group on Sunday. They got approval from UAE government on Tuesday. Through the investment, AGIS will be equity method affiliate of Nippon Steel. Nippon Steel has the first production base in Middle East to follow construction sheet steel demand in the area with expectation for annual 8-10% growth.
Through the investment, Nippon Steel covers broad area from South East Asia to Africa while the firm already has production and supply bases in South East Asia and Africa. The firm tries to cover Middle East and North Africa from AGIS. After the transaction, Al Ghurair Group controls 80% of AGIS with 20% share by Nippon Steel. Nippon Steel sends a director to AGIS with total 5 directors. Nippon Steel will provide more than 200,000 tonnes of hot coil per year. Nippon Steel eyes technical support to AGIS for higher quality products. UAE’s first hot-dip galvanizing maker of AGIS started commercial operation in 2009. The firm has annual 460,000 tonnes of annual picking capacity, 360,000 tonnes of cold rolling capacity and 250,000 tonnes of hot-dip galvanizing capacity. The firm eyes second continuous galvanizing line project. Nippon Steel has supplied total around 80,000 tonnes of hot coil to AGIS. Galvanizing steel demand is annual around 6 million tonnes in Middle East and North Africa. AGIS covers mainly Gulf Cooperation Council members of 6 countries, in which only 3 hot-dip galvanizing steel makers including AGIS. The demand is expected to keep growing when Qatar plans to build 11 stadiums for World Cup in 2022. Nippon Steel had developed offshore supply network to supply transplants of Japanese manufacturers. The firm also develops supply network to serve construction demand especially in emerging countries in recent years. The firm supplies material sheet for galvanizing steel through Siam United Steel of Thailand and invested in Vietnamese steel fabricator in 2009. Nippon Steel also invested in Malaysian electrogalvanizing steel maker and hot-dip galvanizing steel maker in 2010. Nippon Steel invested in construction flat steel makers in South Africa and Nigeria.