steel Yourself

What was the vision of Jindal’s investment into the market here, and specifically in Sohar Port?

Jindal Shadeed Iron and Steel is an integrated Steel Unit with origins in India. We had been looking for opportunities to work outside of India and the opportunity arose in Oman. Here, a plant was already partly built as the previous investors had run out of money, and thus it was for sale. We made the acquisition in 2010 and production started in January 2011. The Sohar Port is of logistical importance to the region, and we entered into the Omani market as part of a decided strategy. Sohar Port has a jetty that can be used for large cargo and it has geo-political centrality. Another factor that influenced our investment decision is the availability of natural gas in Oman, a vital resource component for our supply-chain. The positive approach of Oman’s government also demonstrated that this was the right place to invest.

What will be the long-term benefits of Jindal’s $2 billion investment in Oman?

When we took over the plant, it was set up to produce HBI, an iron ore product that heavy industry uses to produce steel. However, HBI is not directly marketable to consumers. Therefore, we invested a large amount of money into setting up a steel producing shop to use the HBI. The facility is currently set up to produce 1.5 million tons of HBI and with the steel shop we will be able to produce 2 million tons of steel. Our products are now marketable to a wide range of consumers. In the future we will be producing goods such as rebar and wire rods. We are moving towards taking a raw material to a finished product and working through the whole supply-chain to meet the needs of the entire region. We are also researching alternate energy sources, due to gas shortages in Oman.

Can you provide details on the balance between Jindal’s domestic market and exports overseas?

Steel demand is increasing in the GCC region. The UAE and Oman are large procurers of steel and our target is to meet their requirements. Demand has also grown in Africa, especially in the North African region where we already have a market presence. During our sole HBI production phase, our main export pool was Italy and Egypt. Our finished steel product will be of great benefit to the GCC area and of no detriment to our current, more internationally based clientele. What type of balance are you planning on between your upstream, downstream, and midstream production?

Having a well balanced, flexible product inventory is our competitive edge. The diversification of HBI into steel production has enabled us to take further steps towards our objective of creating speciality products, such as rebar. Saudi Arabia has recently built an HBI manufacturing facility, yet they lack the resources for the production phase. Our aim is to supply their plant with HBI, and provide steel supplies also. As the oil price has declined, the price of pipes has decreased in correlation. We are increasing our production flexibility and export outlook in order to weather these changes in market conditions.

Jindal had acquired a $725 million loan from Bank Muscat. How was that partnership formed and what will be the mutual benefits?

We have a strong relationship with Bank Muscat and they are also happy with our performance. They provided us with financial capital since the formation of our steel shop. We have a strong, open and transparent working relationship.

What other targets and expectations do you have?

The main thing we need to work on is our steel department, and we have a shortage of material so we have to import at times. The price of scrap metal is low so we continue to look for ways to diversify our inventory. Another target is to work closer with the government on environmental policies.