Indian Firm, Aarti Steel Plc, Invests $55m USD In Ethiopian Steel Project
Sept 28, 2012
VENTURES AFRICA- Aarti Steel Plc today inaugurated a one billion birr ($55 million) steel producing factory in Oromia Regional State, in a somewhat unusual foreign investment in the little-known Ethiopian steel-manufacturing sector.
The factory -to be based on 40,000 square metres of land in the Galan area of Oromia state, on the outskirts of capital city Addis Ababa -is the project of Indian-based diversified manufacturing company Aarti Steel Plc; a market-leading steel producer in the Asian country.
Having secured a business licence from the Ethiopian state in March of this year, the company now stands ready to launch its factory and commence production. While the company’s Indian-based manufacturing operations produce multiple types of steel product largely for use in the automotive industry – including carbon and alloy steel rounds and squares, sponge iron, power and ferro alloys, spring steel wires and tyre bead wire – the company’s Ethiopian factory will initially focus only on the production of galvanized corrugated steel, the Reporter discloses.
The minerals and metals sector currently accounts for approximately 1 percent of the country’s industrial production figures; Ethiopia’s economy relying on the agricultural sector which employs over 80 percent of the labour force, with coffee production accounting for over 10 percent of the country’s foreign exchange. Ethiopia has not yet discovered many varied deposits of mineable assets compared to other mineral-heavy African states; its main mineral export resource to date being gold.
Indeed, only a month ago in August of this year, British mining company Nyota Minerals became the first foreign company to win a mining licence from the Ethiopian state for its gold mining operation known as Tulu Kapi located in Western Ethiopia, after discovering an estimated 52 tonnes gold deposit.
Thus Aarti’s new factory launch comes to a rather under-developed Ethiopian steel market, which at its outset is favoured by a number of factors, most importantly, the Ethiopian government’s recent decision to push the minerals sector. State Minister for Mines Tolesa Shagi recently stated: “We expect our rich mineral wealth to contribute to economic development in Ethiopia”. Explaining the lack of a strong and developed minerals industry, he added: “As an African country we have not had the knowledge or the resources until recent years”.
Aarti’s new factory promises multiple benefits to the Ethiopian state; not only will a sizeable steel factory take up production – with Aarti Account Manager Dinesh Satti already planning expansion by next year –, the factory will also open up a whole new employment market, and will require a significant labour force.