OMAN - Industry
Vice Chairman, Sohar Steel Group
Khalid Tawfiq Abdel Rasoul holds degrees in marketing and finance from the University of Missouri-St. Louis, and an MBA from the University of Hull. He started his career with Matrah Cold Stores (Enhance Oman), where he worked as a sales executive manager responsible for British American Tobacco. In 2007, he joined the family business at Sohar Steel Group and Al Azaiba Furniture Factory.
We started in 1996 with Sharq Sohar Rolling Mills. We were only a small company at that time, generating 100,000 tons of steel per year before gradually increasing to 250,000 tons. In 2008, we saw a need to generate our own raw material and decided to open Sohar Steel. Sohar Steel mainly focuses on raw materials such as billets, which we use to produce rebars, and hot briquetted iron (HBI) and direct reduced iron (DRI), which we receive as scrap and as a raw material to get the billets. When the Omani economy started to recover, consumption stood at 1 million tons per year, and we decided to increase our capacity of rebars. In 2016, we started another rolling mill attached to Sohar Steel, and this generates around 500,000-600,000 tons of steel. Therefore, the group’s total production increased to 800,000 tons of steel. Eventually, we merged both factories and rebranded them as Sohar Steel Group.
We mainly source our raw material from the GCC as well as locally. Unfortunately, in Oman this is one of the issues that we constantly face. The industry needs raw material; however, the raw material in Oman goes to other countries. This issue needs to be looked at by the government to protect local factories.
One of the drawbacks for the industry is that electricity is not subsidized by the government, while gas prices have increased by 100%. Rent for the land has also gone up, and our production costs have subsequently gone up. The government should review all these tariffs it places on producers.
Rebar prices are variable. Sometimes, the rebar price is less than our operations costs and other times there are great margins. We are considering going into something new to diversify our portfolio so that we do not only depend on rebars or billets. We are currently visiting factories abroad to determine if our plans are feasible. This will be a downstream business that may add value to the Sohar Steel Group as well.
We serve the construction industry across the GCC. Earlier in our history, we were supplying rebars to Oman. Later, we started supplying almost 30,000 tons to markets around the GCC. We generate around 60,000 tons of steel per month, which falls short of full capacity because of the shortage of raw materials.
One of our objectives is to focus on Omanis and training, and our aim is to Omanize our factory. Instead of 45% Omanization rate, we target 60%, though this is something we are planning with the support of the government, because without its support we will not be able to succeed. The objectives are to diversify the portfolio for 2019, continue providing excellent service to our customers, and to open a training center in the factory.
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