Emirates Steel signs MoU with Etihad Rail

The first stages of Etihad Rail will be used to transport materials.

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Emirates Steel has signed a Memorandum of Understanding with Etihad Rail, the master developer and operator of the UAE national railway, to use the network as the key mode of transportation for steel across the country.

The AED40bn cross-country network is soon to commence the first of three phases of construction that will eventually connect all the emirates and form part of the long-term plan to develop a cross-GCC railway. The network will eventually transport both freight and passengers, but will begin with materials. The deal will allow Emirates Steel to meet the distribution needs of the growing demand for steel products and avoid road transportation where possible.

“We are one of the heaviest users of road haulage in the Emirates,” said Saeed Ghumran Al Romaithi, Acting CEO at Emirates Steel, who signed the deal with Etihad Rail CEO Richard Bowker last week. “Therefore, real environmental benefits will be realized by taking trucks off the road, easing road congestion and enhancing road safety.”

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“The absence of a rail network means that our raw materials and finished goods are transported via road, causing significant constraints on transport volumes and distances,” added Mubarak Al Khaili, vice president of Commercial Strategy at Emirates Steel. “We believe that the railway will offer us increased flexibility and responsiveness, controlled lead times, and optimised costs.”

Etihad Rail, whose network will span 1,200km, estimates that raw materials and finished goods flows via the railway could reach an estimated annual volume of 12 million tonnes by 2016 through the integration in the transport process.

Abu Dhabi National Oil Company (ADNOC), Etihad Rail’s first customer, will soon use rail to transport granulated sulphur from sources in Shah and Habshan to Ruwais for export. Construction on Phase One of the project – a 266km route that will link these three cities in the Emirate’s Western Region – is expected to begin this summer, and is scheduled to be commercially operational in 2013.

“Both Etihad Rail and Emirates Steel are playing an important role in the overall development of the UAE as well as in driving the country’s economic growth,” added Bowker.