NA Ansari, CEO of Jindal Shadeed Iron & Steel, talks about the potential of manufacturing sector in general, and steel industry in particular, to contribute to Oman’s economic diversification, and the key challenges facing the industries
As part of its diversification drive, the government is attracting foreign investments in free zones and special economic zones across the country. How are these measures going to accelerate the growth of Oman’s manufacturing sector and help achieve the goals of economic diversification?
The industrial sector has for long been the foundation of Oman’s long-term diversification strategy as it is also capable of meeting the country’s social development needs and generating more employment opportunities. There is no doubt that the contribution from industry to the Sultanate’s GDP at 16.6 per cent, has played a significant role in shaping the Sultanate’s economy in terms of accelerated growth, diversified and sustainable development with an aim to generate employment opportunities. There has been a steady rise in the industrial activity along with strong investment growth in this sector.
The manufacturing industry in Oman will continue to pick up and somewhat help reduce the deficit in view of the construction, manufacturing and infrastructure developmental activities. One of the reasons is the government support for the SME sector: In line with the vision of His Majesty, development of SMEs is one of the means for the development of Oman. In addition, the steel sector has a huge potential in providing the needed impetus to the growth of SME sector in some of the following downstream value added units. There is enough demand for steel in this region, because steel demand in the Middle-East is marked by the rise in economic conditions in the region. The reconstruction projects are expected to raise demand of steel in Saudi Arabia, Qatar, Kuwait, UAE and Lebanon. Saudi Arabia is the fastest growing steel market in the Middle-East followed by UAE. Middle East steel industry has third fastest growth rate worldwide following China and India, and vigorous demand growth would support capacity enhancement in the industry.
Oman has investment potential as there are infrastructure development plans like railways, roads, real estate, port etc. A country like Oman which is embarking on a new era of infrastructure and industrial development would support the growth potential of industry. The Sultanate’s efforts to encourage non-oil sector industries would definitely contribute to the economy and become an alternative to oil dependent economy.
What are the main challenges facing the industries in Oman?
Some of the main challenges for industries in Oman are:
Industry-friendly policies to be brought for win-win situation.
Allotment of manpower position as per company requirement.
Time taken for clearances – speedy clearances are required.
Visas should be provided based on group wise i.e. construction workers/industrial workers/domestic helpers etc rather than trade wise.
Availability of natural gas at subsidised rates is a great challenge.
Investments on new projects purely depend on the availability of gas or cheap alternate fuel.
Environmental clearances are taking too long time to approve.
The regulation should have iron and steel making process specific norms.
How is the recent performance of Jindal Shadeed and what are the recent milestone achievements of the company?
Jindal Shadeed Iron and Steel (JSIS)’s performance has been continually on the increasing trend both in terms of quality and quantity. JSIS has now switched over from a supplier of Hot Briquetted Iron (HBI) to a supplier of steel products – square and round billets/ blooms after the commissioning of 2.0 MTPA Steel Melt Shop in April 2014. For further value addition, Jindal Shadeed established downstream facilities by commissioning 1.4 MTPA Rolling Mill in January 2016 to convert semi-finished steel to finished rolled products for construction industry. Jindal Shadeed is substantially contributing to revenue generation by in-country-value addition and the growth of Oman GDP in manufacturing sector.
Our plant layout is compact and the integrated nature of plant operations is also contributing to in-country value (ICV) capture. We have hot charging technology that hot DRI directly going into the electric arc furnace at a temperature of about 650-700 degrees celsius. We therefore save a substantial amount of energy in doing so. Our Steel Melt shop and Rebar Mill are also integrated so that Hot Billets can be directly put into the furnace in the Rebar Mill. The whole point is that, we consider ourselves to be more energy efficient than anybody else, certainly in the GCC. As far as hot material going directly into the furnace, we are the first company in the world having such facility. I do not have to keep large intermediate stocks because we are directly feeding hot material and can therefore manage with much less inventory. The billets we produce are used as feed for the Rebar Mill. This is a great advantage for us because we can supply billets and rebars to our customers in a much shorter period.
Jindal Shadeed is the recipient of the following Certificates:
Integrated Management System (IMS) Certified company with ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007.
CARES Certification for ISO 9001:2008 for the production of Continuously Cast Steel Billets and Hot Rolled Reinforcing Bar.
CARES Certification for BS 4449- 1997 (Grade 460B Bar 8 to 40 mm) and BS 4449-2005 (Grade B500B Bar 8 to 40 mm).
DCL Product Conformity Certification for Rebars 8-40mm for BS 4449:1997 and BS:4449:2005 for Grade 460B and Grade 500B respectively from Dubai Municipality, Dubai.
Certified by Bureau of Indian Standards IS 2830:2008 & IS 2831:2008 for Billets & Rounds.
Certified by Bureau of Indian Standards IS 1786:2008 for High Strength Deformed Steel Bars for Concrete Reinforcement Fe 500D Grade.
Approved for using “Origin Oman” logo on their products.
Certified by Saudi Arabian Standard Organisation (SASO) for Steel Rebars (SASO ASTM A615:2015).
Certified by Petroleum Development Oman (PDO) for Steel Reinforcement (Rebar).
Despite a critical steel market, the company has established itself as a formidable player in the region and achieved several production and operational milestones. The company has been felicitated with prestigious awards such as the world’s best performing Midrex Plant (1.5 MTPA category) and Frost & Sullivan’s Steel Manufacturing Product Line Strategy Leadership Award. Last year, Jindal Shadeed has also bagged the esteemed Sultan Qaboos Award for industrial performance excellence.
Has the economic slowdown in Oman and in some of your export markets affected your performance?
Present steel market scenario is not conducive for the health of steel industry. One of the reasons is the dumping of cheaper steel from China, Turkey, Russia, Ukraine etc. The present steel market worldwide is facing challenges in marketing its steel products. This is because of unfair means of continual imports of Square Billets from countries like China, Iran, CIS etc. at much lower prices which are less than actual cost of production. Such cheap imports are also coming in to UAE and other GCC countries.
The financial health of domestic steel industry is deteriorating because of surge in imports of steel at a price lower than the domestic cost of production, thereby creating a threat to the jobs and survival of steel industry.
In addition, presently Jindal Shadeed is facing challenges in the availability of gas at affordable prices.
When it comes to the factors helping to overcome these challenges, the pricing situation is very dynamic. Appropriate decision making while marketing our products is vital and we succeeded in making right decisions. Other factors include identification of ideal product mix, production of more value-added items, increase in customer base by identifying specific needs, supplying quality products and timeliness and cost control measures that are being undertaken up to reduce the cost of production.
What is your future outlook and what are the potential opportunities you are looking forward?
2017 will be challenging in view of the current global economic conditions. Oil-exporting countries within the GCC, including Oman which are traditionally oil dependent are aiming to diversify their economies. Many projects have been announced recently in the GCC often with the objective to reduce import dependency and hence demand for steel from downstream industries is expected to be increased. Though global steel market is not encouraging, in Oman, growth in steel demand continues to be encouraging. This will see remarkable growth in the Industrial Sector.
Our immediate concern is that we need to increase our Rebar Mill production to the full capacity. The other concern we have is that the availability of gas at a subsidised price to produce as much metallics as we need. Therefore, we need to find other sources of metallic to increase the production of our Steel Melt Shop to 100 per cent capacity. We are also looking for further investment in the longer term to improve our capacities and reduce costs. We are looking at possible options and will be taking a decision as to how we can really put in some additional facilities so the cost can be reduced. The target is to accomplish this in three years. We are also a company that is socially-minded. We are close to society and do a lot of work for society under our CSR initiatives, including the building of facilities for the weaker sections of society and children. This is something we have been doing on a regular basis and our company is well known for these efforts.
What about investment opportunities for downstream steel projects in Sohar?
Our main objective in todays’ steel business is to achieve capacities utilisation of the various units of the plant. Depending on the business needs we might plan for upstream and downstream integration of our operations.