The Business Year

Ali Bin Hassan Al-Muraikhi

QATAR - Industry

Sources of Pride

Director & General Manager, Qatar Steel Company

Bio

Ali Bin Hassan Al-Muraikhi was born in 1958 and graduated from Qatar University in 1981 with a degree in Sociology and Social Work. He later obtained his MBA in the US. Following graduation he joined Qatar Steel and worked as a Trainee in the Personnel Department and gradually rose up the ranks. Since 2010 he has been Director and General Manager of Qatar Steel. He is also General Manager of Qatar Metals Coating Company, a joint venture between Qatar Steel and Qatar Industrial Manufacturing Co.

"Qatar Steel is also maintaining its cost position as an integrated steel mill through operational excellence."

What is the history of Qatar Steel and what have been some of your major achievements throughout the years?

Over the last decade, Qatar Steel has transformed itself into a growth-oriented business entity posting impressive operational and financial performance. Since 2003, the company had gone ahead with many expansions increasing capacities in all its production facilities: direct reduction (DR) is up from 0.75 million tons per annum (mtpa) to 2.25 million mtpa, the electric arc furnace (EAF) increased from 1.2 mtpa to 2.15 mtpa, and in the rolling mill (RM) it is up from 0.70 mtpa to 1.5 mtpa, thereby increasing the sales volume of saleable products from 1.00 mtpa in 2003 to 2.580 in 2012. The subsidiary unit in Dubai was upgraded with a new bar rolling mill with a capacity of 0.30 mtpa and by increasing the capacity of wire-rod and rebar-in-coil mill from 0.18 mtpa to 0.24 mtpa. Over the years, the company has built its reputation on sound operational and management practices in various facets of business. We have also acquired a number of accreditations for product quality, and launched a new corporate brand identity in April 2007, whereby QASCO was changed to Qatar Steel with an external promise of making steel matter. Qatar Steel was the first known Qatari organization that initiated Balanced Scorecard implementation at the beginning of the millennium. A decade later, it became the first Qatari company to be inducted into Palladium’s Hall of Fame for Strategy Execution, an international accreditation for excellence in strategy management practices. At present, Qatar Steel is the exclusive provider of steel to the State of Qatar, a source of national pride, and one of the major contributors to the non-hydrocarbon economy of Qatar. The company directly employs around 2,000 people across operating units in Qatar and the UAE, primarily providing long steel products to the regional market.

What effect has the rise in prices of raw materials had on Qatar Steel?

Input costs play a vital role in the steel industry globally, and not just for Qatar Steel. The metallic steel price movement makes a significant impact on the movement of finished product prices across the globe as they are closely linked. Typically the oxide pellets that go as a feedstock into DR based production constitute around 60% of the cost of goods sold, such as rebar and finished products. Therefore, any volatile movement in these prices has a major impact on the bottom line unless the price escalation is well absorbed in finished product prices. The demand for construction steel in the GCC also plays a vital role in the finished product price movement in this region, which is historically higher than the global average. They have been supportive in absorbing price increases in metal prices, except during the recession period in the latter part of 2008 and in 2009, when demand dropped drastically. Finished product prices have been reasonably supportive. Qatar Steel is also maintaining its cost position as an integrated steel mill through operational excellence to derive competitive advantage in the market.

“Qatar Steel is also maintaining its cost position as an integrated steel mill through operational excellence.”

What is Qatar Steel’s target market?

Qatar Steel sells its finished products predominantly in the GCC. The primary market of rebar for Qatar Steel is Qatar, which constitutes around 65% of its total rebar sales in GCC, while wire-rod and re-bar in coil are predominantly sold in the UAE and Qatar.. The company meets the growing domestic demand and also maintains a market share of around 15% in its core rebar business in the GCC. The strategy has always been flexible with exports depending on the supply and demand situation. In essence, we maintain a presence in all export markets within the GCC with higher volume of sales in major markets like Saudi Arabia and the UAE while maintaining large presence in Bahrain which is small and import driven.

What role does innovation play in the steel industry?

Through constant innovation, Qatar Steel develops new technologies and processes, which result in increases in productivity, cost savings, and also significant reductions in carbon emissions and other pollutants. Qatar Steel’s focus on innovation extends to its by-products, including slag generated from EAF molten steel processing, oxide fines produced by the DR iron plant, and mill scale generated from caster and RMs. Instead of discarding these by-products, Qatar Steel repurposes them to maximize their value and sells them to customers for further use. Qatar Steel has created an R&D department to provide impetus to research activities and to be pro-active in meeting market requirements as a leading integrated steel manufacturer in the GCC.

What investment efforts is Qatar Steel making in “frontier” markets?

Apart from fast expansions in the operating unit in Qatar, we have also invested in a re-rolling unit in the Jebel Ali Free Zone in Dubai since 2003 that is producing rebar, wire rods, and rebar-in-coils. We have gone ahead with prudent investments within the GCC and in the MENA region totaling in excess of $550 million. This includes a new joint venture in Algeria, to be owned 51% by Algerian companies and 49% by Qatar Steel International—50% Qatar Steel and 50% Qatar Mining—for Phase I with 2 mtpa long-steel capacity. Qatar Steel has signed an MOU with Sheikh. Jassim Bin Mohammed Bin Thani Establishment for Social Care for a JV steel project in Qatar with 0.700 mtpa capacity of bar mill and 1.1 mtpa capacity of Steel Melt Shop.

How would you assess importance of, and how do you go about the development of human capital?

Qatar Steel recognizes its employees as the company’s greatest asset, and as such it views employee engagement and Qatarization as a critical component of success. Under the “Organization Development Program,” a number of initiatives are aimed at enhancing employee morale, introducing a corporate culture to create a spirit and sense of belonging, upgrading the performance review process, and finding innovative ways to increase and sustain motivation. There is an annual performance appraisal system to reward, recognize, and retain meritorious employees.

What is your outlook for the industry sector in Qatar?

The steel market in Qatar has been favorable over the last decade, especially during 2003-2008 when we had an unprecedented construction boom. The outlook is positive with real GDP growth expected to come from the non-hydrocarbon sector in the coming decade. Qatar is making rapid progress with its formidable pipelines of infrastructure investments worth over $130 billion that will run through to 2020. These investments cover transport, logistics, and rail (Doha metro, long-distance rail, freight, and the Lusail people mover), roads, new stadiums, hotels, and ancillary facilities. The impetus is on FIFA-related infrastructure development and the steel industry will largely benefit through this period. Steel demand is expected to grow at a compound annual growth rate (CAGR) of 5% to 6% during 2013-2022, with supportive government spending and Qatar Steel prepared to meet this growing local steel demand.

What are the medium-term plans and goals of Qatar Steel

Qatar Steel pursues its growth strategy of upgrades and new expansions in order to meet the growing steel demand in Qatar. It needs to consolidate its competitive position in the regional markets within the GCC. With no additional advantageous feedstock in Qatar in the medium term, the company will find new sources of growth and look for strategic investments by way of acquisitions and joint ventures in iron ore and steel-related products within the MENA region. We will continue to create value for our stakeholders through profitable growth from operating units in Qatar and Dubai and through our strategic alliances and investments.

© The Business Year – July 2013

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