(By William Davison)

An Ethiopian company owned by Saudi billionaire Mohammed al-Amoudi and Italy’s Danieli & Cofficine Meccaniche SpA signed a $600 million deal to build the nation’s biggest steel plant, Project Director Shimelis Eshete said.

Derba Group’s Toussa steel factory, which will take three years to build at Gelissa near Kombolcha town, will convert scrap metal imported mainly from Europe and the U.S. to meet growing steel demand in Ethiopia and East Africa, he said.

“Economic growth and the development of infrastructure projects in Ethiopia are the key drivers of the rise in demand for steel products,” he said yesterday in an interview in the capital, Addis Ababa. “This factory will definitely have an impact on all economic sectors.”

Ethiopia, Africa’s second-most populous nation and largest coffee producer, is in the middle of a state-led five-year growth plan to build infrastructure including hydropower dams, roads and railways while boosting industrial output.

Al-Amoudi’s Midroc Ethiopia, which owns Derba Group, also has investments in areas such as gold mining, hotels, trucking, fuel stations and  agriculture. Ethiopian-born Al-Amoudi is the world’s 61st-richest man with a fortune of $12.5 billion, according to Forbes magazine.

‘International Standard’

Midroc, development banks and commercial banks are financing the plant, which requires $164 million in additional equipment and startup costs, Shimelis said without providing more details.

Buttrio, Italy-based Danieli, which signed the contract this week, will start construction in the next two months, Shimelis said. The factory should be producing its maximum annual output of 1.35 million metric tons of “international standard” steel products within three years of starting operation, he said. As much as a quarter of production may be exported, he said. Ethiopia now produces 234,000 tons a year while importing 750,000 tons annually, Shimelis said.

The plant, sited about 254 kilometers (158 miles) north of the capital, will require as much as 260 megawatts of electricity and will eventually be served by a rail link to the nearest port at Djibouti, he said.

Source: Bloomberg News – October 5, 2012. Originally titled “Saudi Billionaire Signs $600 Million Ethiopian Steel-Plant Deal”.

************

Check the drop down menu at the top for related posts.