Cases

Conducting a Feasibility Study to Set-up a Steel Plant in Oman, for a Conglomerate Based in U.A.E

Background and Challenge

The client is a conglomerate based in the U.A.E, having presence in diverse businesses like steel, power, environment and polyethylene. Steel is the major business for the group and the company in its bid to expand presence in the Gulf corporation council (GCC) region, was evaluating the option of setting-up a steel plant in Oman.

The top management wanted answers to the following key strategic questions in order to take a decision on entering the Oman market:

  • Is there a demand-supply gap for steel products and in which value-chain segment?
  • What capacity plant should be set-up based on the demand-supply gap?
  • Should it be an integrated plant or only a rolling steel mill?
  • Is there a cost-advantage of setting-up a plant in Oman vis-à-vis U.A.E?
  • Which location should the plant be set-up (Muscat or Sohar)?
  • What are the entry and exit barriers?

Approach and Recommendations

UC did the research for this project with the following processes:

  • Landscaped the steel industry across all value chain components
  • Conducted detailed desk and primary research and estimated the current and future market size and the likely demand-supply gap in each value chain component

    1) Finished products (Deformed bars, Structural steel and Pipes)

    2) Semi-Finished products (Billet)

    3) Scrap

  • Identified segments where the client can evaluate setting-up a plant
  • Analysed the impact of government policies and regulations on doing business in Oman
  • Analysed the cost-advantage of setting-up a plant in Oman vis-à-vis U.A.E
  • Defined parameters and concluded on the attractiveness of the locations Muscat and Sohar

Results

UC recommended a strategy for the client and the likely future strategic business risks moving forward.