Welcome to Economic Impact, conversations from Emirates Development Bank (EDB), the key financial engine for economic development and industrial advancement of the UAE. In each instalment CEO Ahmed Al Naqbi leads insightful discussions with change-makers and thought-leaders in the UAE to learn how they’re contributing to the nation’s economy and realising the UAE’s economic ambitions.
Welcome to episode seven in season two of Economic Impact: Conversations from EDB’.
This time we welcome H.E. Saeed Ghumran Al Remeithi, Group CEO of EMSTEEL, Abu Dhabi's global leader in sustainable steel and building materials production.
He talks us through pioneering the production of green steel - with 45% less emissions than competitors - and introducing AI and digitization to enhance efficiency.
You can listen to 'Economic Impact' wherever you get your podcasts. Plus, you can watch ‘Economic Impact’ on the EDB website, edb.gov.ae, and on Youtube. Subscribe and like us on Facebook, Instagram and LinkedIn - and let us know what you think…
To find out more, just look for ‘Economic Impact, Conversations from Emirates Development Bank'.
Speaker 1: HOST
Speaker 2: GUEST
00:00:00 INTRO V/O
“This is Economic Impact...Conversations from Emirates Development Bank”.
00:00:05 Speaker 1
As-Salaam Alaikum and welcome to another episode of Economic Impact, today we're honored to have a fantastic guest. His Excellency Mr. Saeed Al Remeithi, who is the group CEO of EMSTEEL - EMSTEEL, was formerly known as Emirates Steel Arkan, and this is the largest company on the exchange here in the UAE for trading materials and steel.
00:00:25 Speaker 1
So, Mr. Saeed, if I can just start, maybe by having a quick conversation with you and asking you about the history of EMSTEEL?
00:00:31 Speaker 2
Sure. Well, thank you for receiving me, Ahmed. Great to be here. Honestly, thank you. OK, well, as you said, Emirates Steel was only steel manufacturer…
00:00:45 Speaker 2
Started actually in 1998, as a small rolling mill in in Abu Dhabi and then it was expanded like you know as backward integration to become an integrated steel mill, actually it was the largest steel mill and in the country. For a time. And then in 2021, we have merged with ARKAN, which is the building material. Arkan was listed in the Abu Dhabi market.
00:01:14 Speaker 1
Right.
00:01:15 Speaker 2
And this was the reverse acquisition and then both companies, you know, were listed in Abu Dhabi exchange market, which was called Emirates Steel Arkan, as you would say…
00:01:29 Speaker 1
Right.
00:01:30 Speaker 2
…I joined the company right after this, the start up, around 2001…
00:01:35 Speaker 1
Oh, Mashallah…
00:01:36 Speaker 2
…Yeah. So I've been there since then…
00:01:38 Speaker 1
For 24 years…
00:01:39 Speaker 2
Yes, absolutely, so…
00:01:40 Speaker 1
Mashallah.
00:01:41 Speaker 2
So, I started as the production engineer at that time after my graduation.
00:01:47 Speaker 2
And then slowly, I was like, you know, I was growing actually along with the with the company. Were mainly in the operations among the people that that's something I would always love and I'm always so proud of. So we, as I said, we established Emirates Steel at that time with integration, so they were two major expansions phases - we call them phase one and Phase 2.
00:02:12 Speaker 2
Where the company has grown from 500,000 tonnes, production of steel yearly to 3.5 million tonnes. As I said, to become the largest steel manufacturer in the country. Subsequently, I was in charge of operation for quite some time and then I was selected, or was appointed, as CEO in 2011.
00:02:37 Speaker 1
Mashallah, you know I'm always interested - leaders like yourselves, who have been for a very long time with such institutions, and you've obviously been on the journey of seeing the growth of the of the company over, over that time. What kept you with them for, for so long, you know, we live in a world today where people they take 2-3 years, they jump from place to place. It's great. It's refreshing to hear someone that's been with this organization for this long.
00:02:59 Speaker 2
You know, it's a good question. You know, among steel producers, we always say once we start in steel…
00:03:07 Speaker 1
Hmmm
00:03:07 Speaker 2
..you stay in the steel.
00:03:08 Speaker 1
OK?
00:03:09 Speaker 2
So I think it's, it's perhaps it's the passion…
00:03:12 Speaker 1
OK.
00:03:12 Speaker 2
…that's like, you know, the industry that I've been always like when after my graduation, I I really wanted to really join a manufacturer company. It was just my passion to really be part of, like, you know, production, something big, something that will contribute to the to the country, something, something different, not like you know, a surface company I would say…
00:03:34 Speaker 1
Right.
00:03:35 Speaker 2
But I would say I just love, I love what I what, what I'm doing it just like, you know, I love the manufacturing. I love what we do every day. I love the change…
00:03:43 Speaker 1
Right.
00:03:44 Speaker 2
And the manufacturing it's, it's, it's, it's the dynamic, it's the challenges. It's like you know, the things that you come every day to the office there's something new.
00:03:52 Speaker 1
Right
00:03:52 Speaker 2
It's not like, you know, there's no routine whatsoever…
00:03:54 Speaker 1
Right.
00:03:55 Speaker 2
So, I can tell you since 2001 - since I joined, I would say I would never have a week, a piece, a piece of week that that I say in terms of like you know things that we needed to be done.
00:04:09 Speaker 2
Erm, that's one. Second, just being proud of what has been accomplished like, you know, and Emirates Steel Arkan, which is called EMSTEEL now. But it's just like in the journey I I've been as I said like, you know, I started as a production engineer and then I climbed the ladder. I've been part of the growth, part of the contribution.
00:04:28 Speaker 2
There's, there were so many challenges, but also there were so many opportunities that I've seen in my career and, um, also important thing, I just love to work with people and like, you know, in manufacturing, we're always around people. So, the passion like, you know in the industry and just being…being there around people and like you know, try to really accomplish something.
00:04:53 Speaker 1
That's fantastic. There's so much to unpack there that I could, I could go into. My curiosity is on the, over the course of those years, you said you started with the rolled steel and I'm sure you then expanded to multiple other products. What are some of the other products that, uh, you guys expanded into whether it was through the, the, the reverse acquisition or whether it was just natural growth into the company?
00:05:13 Speaker 2
Yeah. So, we, we produce a lot of types of steel - mainly longs, long steel that's including rebar, wire rod. sections, sheet piles. And then when we, when the merger has happened back in 2021, as I said with Arkan, this is where the building material come across the portfolio where cements blocks mainly building materials products were there…
00:05:40 Speaker 2
Of course, during those years there were a lot of products were introduced and the both at the same, the both divisions, erm, like you know in terms of steel and building material, a lot of innovation, a lot of products were introduced are not really normal, but I would say niche products that, al hamdulillah, we have produced and subsequently for that reason only I can tell you today we are present in more than 70 countries…
00:06:09 Speaker 1
Mashallah, all exports, of course, from the UAE, from here, all manufactured here…
00:06:13 Speaker 2
All exports, yes, we're all manufacturing here and like in a lot of products actually shipped all over the world including US like you know a lot of going in Europe and many, many places. But that comes actually because, al hamdulillah, the quality that we are able to reproduce here.
00:06:29 Speaker 2
And those products are actually accepted in the, in these markets. Erm, tough like you know and to be also present there and being accepted you have to be very efficient…
00:06:39 Speaker 1
Right.
00:06:40 Speaker 2
You know, your cost has to be low because you encounter the shipping and all that. But we have a really great, I would say, customer base.
00:06:49 Speaker 2
And all those, all those countries. And as I said, the products are very well known there.
00:06:55 Speaker 1
And you said there's a lot of innovative products that you guys have created. What, what are some examples of those?
00:06:58 Speaker 2
Yes. Erm, great example is sheet piles. Sheet piles, it's a technical term, but it's a type of product that's actually it's very difficult to reproduce. So we are one of the manufacturer. I mean, it's rare to produce. I think we are the only one in the Middle East. So, only few manufacturers can really produce such, such products and it's application - it's also very difficult. So, it's niche products…
00:07:25 Speaker 1
Right…
00:07:25 Speaker 2
…and then the premium is very, very high.
00:07:29 Speaker 2
Erm, this is one. Another overall, I think, also just to re-add, we are accepted in those markets because of our low emissions and this is I think is something is very important. We can build up on and this in our discussion because this is the future that I really see like you know for our company is actually around sustainability…
00:07:51 Speaker 1
Right.
00:07:52 Speaker 2
And the low emissions that you know, like, you know, we have a low carbon emissions steel that we actually produce here in in Abu Dhabi and for that that we see, of course, like you know the acceptance also is very high in in those markets.
00:08:06 Speaker 2
Erm, today like you know, if we compare our emissions versus our competitors overall we are less by 45%, the emissions that are, that we produce…
00:08:19 Speaker 1
And how do you achieve that? How do you get to that?
00:08:20 Speaker 2
Um, actually, it's interesting because this was from the beginning, even when which is, which is like, you know, I think a good credit to our leadership overall when we build up those expansions, those, those plans. Erm, actually we have invested…
00:08:37 Speaker 1
MHM.
00:08:38 Speaker 2
…er, in equipments to really capture CO2, for example, and like you know, to really have state of the art operation and equipments that is actually low in emissions. I can tell you today the company is the only company in the world that actually captures CO2 and gives it to, we give it to Reyadah, which is a company of ADNOC, that is actually the CO2 is used for and...
00:09:04 Speaker 1
It's, it's recycled.
00:09:05 Speaker 2
Yeah. So it's, it's actually injected in the in the walls instead of gas, just to boost up production.
00:09:13 Speaker 2
That's one. As I said, the other thing is just like you know, using scrap, there's a lot of things…there's a lot of initiatives and the company to actually give us credits or give us, let us say, the chance to really produce low emission products.
00:09:29 Speaker 1
And this then counts…so, when you go to your export markets, they look for companies that have that kind of low CO2 emissions and then it gives you a competitive advantage.
00:09:39 Speaker 2
Absolutely. We see that now. Honestly, of course, this is the one thing you know, I mean, this CO2 emissions and like, you know, credits and all that this is, this we see it evolving now.
00:09:48 Speaker 1
Mm-hmm.
00:09:48 Speaker 2
So, you have advantage over others now. It depends on the, on the country. Depends on the product that you are selling the applications and all that. But we see that as is coming not necessarily in markets some markets with the premium, not necessarily that…
00:10:06 Speaker 2
…but just to really accept being in lower, I would say like low carbon steel or products overall and that markets that gives you an advantage to be there. So, the credit also comes from the, your reputation like you know, as I said, like you know the companies were known among the steel industry to be a lower measure steel producer.
00:10:33 Speaker 1
That's fantastic. What is the biggest market that you export to? I know probably it's by product, but are there specific markets that are very large and are you targeting any demographics or any markets?
00:10:44 Speaker 2
No, it's actually what makes sense for us…
00:10:46 Speaker 1
…what makes sense, yes…
00:10:46 Speaker 2
Look, we've, I think last year we've done, I would say 60/40 - this goes up and down. So, we're from like you know 60-70 local, erm selling and then like you know let's say 30-35.
00:10:57
Mmm Hmm.
00:11:00 Speaker 2
…export, but we go to those markets only if it makes sense for us, as I said, like you know to raise premium and it's also like you know a way for also to diversify or like you know divert to different models. So, it's a risk medication.
00:11:21 Speaker 1
Right.
00:11:21 Speaker 2
I would say back in 2011, we were only in the GCC. I would say here we were GCC maximum...
00:11:30 Speaker 2
And our strategy ever since actually my thoughts was always to the team, we need to really be in different markets just to remediate like, you know, risk and just depending on one market but also to really have as I said like this reputation and then like you know a good database for you to expand.
00:11:50 Speaker 2
Today being, being present in those markets, whatever we can produce in our strategy moving forward, we have we have a base to really go. So, we are established that like you know the market accepting our products, they know us, they know who they deal with.
00:12:04 Speaker 2
You know, usually in in this is very difficult. Why? Because like, you know, as you would imagine, there's a lot of protection over the steel industry overall. I mean a lot of countries now you see they do this protectionism…
00:12:17 Speaker 1
Tariffs.
00:12:18 Speaker 2
…tariffs and all that.
00:12:19 Speaker 1
Yeah.
00:12:20 Speaker 2
And one of them is also to really have the certification and those like, you know, to really to be able to really sell to the markets and that's a process, so you need to redo so many things to really get those certifications so, proudly, that's what we have done all the seeds to be there. And now it will be much easier for us once we expand also. And this is what we are doing diversifying our products is to be to be actually easy to really penetrate those markets.
00:12:48 Speaker 1
Fantastic. One more question on the past and I definitely want to talk about the future. What was one of, you know being there for 23/24 years, mashallah, what was one of the biggest challenges that the company had to overcome during the period of that 20 years that you saw with your own eyes?
00:13:06 Speaker 2
Well, a good question, Ahmad. OK, where to start?
00:13:10 Speaker 1
It's a lot!
00:13:10 Speaker 2
It's a lot. I mean it's, it's everywhere. But I would say overall this this and focusing on steel here, it's simply he market looking at the premium…by the way the company has been always profitable, al hamdulillah.
00:13:25 Speaker 2
Always profitable. And that's something is also, we're very proud of. We are very efficient and we are one of the I would say best efficient company around the world.
00:13:38 Speaker 2
The margins overall are not really high overall - that's, I'm talking about the whole industry, not necessarily in certain products versus other…but this is, this is a challenge because and also the steel because of a lot of steel is commodity. Then there's always a cycle in pricing and the cycle, when the cycle comes, you have to be agile you have to be like, you know, you have to be present that I said this one of the agility that we would discuss is the market.
00:14:08 Speaker 2
But also to really divert and like you know, shift and being, uh, co-op and quick, uh and your reactions to really co-op and the issues and of course like you know when the if there's an overcapacity or there's like, you know, low prices over the market and all that then it's this is where, where the challenges always come so…
00:14:28 Speaker 2
And I can tell you the company is very agile in terms of the costs in terms of like, you know, supply chain in terms of where we sell as I said. But overall this the whole, the whole industry would I would say is the market - it's like you know the prices, the market, the over-capacity overall.
00:14:47 Speaker 2
Erm, now a lot of details over the industry itself, but it's mainly come main challenge comes from China. China produces half of the whole world of steel, but also consumes half of the whole world’s steel and if something happens in China, slows down, then you see a lot of material like, you know, exported from that and that affects the whole, the whole globe in that sense. So that's one I can, I can say many, but I would say like the market would be the highest.
00:15:24 Speaker 1
I'm really interested in two aspects of that. Erm, one aspect, because you talked about the margins and how important it is, you know they're very fine margins. It's a very competitive industry for your organization to be that competitive and be able to have that market share in 70 countries. I'm sure you have to think of very innovative ways to produce your products. I'm assuming there has to be some form of robotics, potentially automation. Artificial intelligence. What has been done for that? For going into the future to ensure that you’ve future-proofed your business and your products?
00:15:56 Speaker 2
Sure. Sure. The philosophy in the company around this is it's a journey - that it never stops. And I think this is embedded in the company which is very important, which is simply like you always look for cost reduction, efficiency, effectiveness and all that…
00:16:16 Speaker 1
Right.
00:16:16 Speaker 2
…and that's something is, it's been generated from the beginning, it's always it is always something that we need to really do to reduce our cost and being as I said agile and being competitive.
00:16:27 Speaker 2
One thing I can…like I…there's so many so many examples and there's a lot of transformation programs that we have embarked, one of which is called Namaa, and this is really a transformation program that has been going on in the company for the last at least 3-4 years, whereas it looks in all aspects of the business and try to really reduce the cost and like you know, make the efficiency and all that and there's a lot of realization, al hamdulillah, in terms of dollar signs and that side. Another important thing, I would say, is what we are introducing now is the AI and the digitisation…
00:17:05 Speaker 1
Right.
00:17:06 Speaker 2
…which is very, very important to being actually a manufacturing company, it's actually, I would say, you're lucky to really have a lot of platforms or a lot of things can, like AI can really affect you and like you know can really help you with. Whether it's been the effectiveness of the company, the efficiency, as I said, like you know and this is across the whole the whole business supply chain, all the way to like utilization, utilities and all that. And that's like, you know, of course, it's a really big subject, but it's really after also a really good, good data that you have in the organization and then you give it to the system and then like you know this is where it helps you to really weather your scores or like you know efficiency time and like productivity and all that.
00:17:53 Speaker 2
So far and this year, for example, we have more than 30 models that model actually that, actually impact in in this front in many, many aspects. And then like you know we see a lot of acceptance but we see also handled a lot of improvements and whether it's assisted in the processes and the protection and all that, but that's something that is, I think, is very important. Also, as much as it's really, I would say shining and it's important but also need to be careful where you actually invest and you do what actually rely, I mean you can realise out of this to your bottom line. So, it's regularization to your bottom line rather than just like you know do the fancy things and like you know…
00:18:37 Speaker 1
Yes, yes.
00:18:38 Speaker 2
And that's you need to be OK for. So, we have a system where actually carefully looking at all those, let's say initiatives, innovative initiatives and we implement it. The great thing is, those ideas and those I would say innovative initiatives are coming actually from the employees.
00:18:58 Speaker 2
OK.
00:18:58 Speaker 2
We have, we have a system. We call, one of the systems we call, actually it's a platform called Think Smart where the employees actually contribute. They put their ideas in, in that system. It's like, you know it's being looked at and it's quantized. And if it's like, you know materialized, it's implemented and then the rewards come to the employees…
00:19:22 Speaker 1
Amazing.
00:19:22 Speaker 2
…and actually we're trying to be a little bit generous and that to in awards. So we put up like you know a good budget for that, and we realize really, really good income out of that.
00:19:34 Speaker 1
It's amazing. How many employees do you have?
00:19:37 Speaker 2
More than three thousand…
00:19:38 Speaker 1
Mashallah, so the brain power of 3,000 people, I'm sure there's ideas left and right that are consistently coming through. That's fantastic. The other thing that you had touched on, which I'm curious about, is you touched on the fact that China accounts for 50% of the production and the consumption. So I'm sure, you know, your organization exporting to so many markets around the world has to have some kind of forward forecasting and thinking with regards to what is happening around the world, what markets will potentially need your products. So, how do you go about that? I mean, that sounds like such a huge task to do?
00:20:10 Speaker 2
Yeah, absolutely. It's just the way our strategy is diverse. You need to be again, like, you know, I mean your cost. First of all, you need to refocus on your cost and your what you are doing to competitive and I think this is this as I said this is journey does not really, it's it's always in a continuation. That's something will never stop.
00:20:30 Speaker 2
But also what advantage I would say that we have and this is where our strategy is all around is, as I said, the sustainability part of the steel. Erm, I think, and this is the dream that I have, we will be, Insha’Allah, a pioneer in terms of leading the whole industry in steel and in producing green steel. We have the platform, we have actually Abu Dhabi is behind us, which is I think is really great.
00:20:56 Speaker 2
Today, I think, we are lucky being like, you know, in a very abundant renewable energy and like, you know, the gas allocation and now hydrogen is something very, very big where hydrogen actually can be used in replacing the natural gas in the steel production and actually to be honest with you the steel is the highest, could be the highest consumer of hydrogen. So, the steel has actually enabled us to really produce hydrogen, and then it's being used to really produce green steel. So, in that in that area, and this is where it's like, you know, even in the core of our, you mentioned earlier our logo…
00:21:33 Speaker 1
Right.
00:21:33 Speaker 2
…the core of our logo here is the sustainability if you can, if you can look at it, is to really produce like you know, green and low carbon emission steel. So, having this in mind is what we want to expand whatever we go in, in markets this will be our strength, to build on it to really have material that would very low emission, carbon emissions. And that's like, you know, we see, as I said is going to be much and much accepted and actually required…
00:22:06 Speaker 1
Hmm.
00:22:06 Speaker 2
…in the markets. We see this now developed in Europe, for example, and in the Far East and we see, as I said like you know the demand is going up and up. So, I think this is the opportunity we have and this is our strategy where we want to really expand, Insha’Allah.
00:22:20 Speaker 1
That's fantastic. So, the company is positioning itself as being a leading producer of green products, green steel in particular. And, this gives you a competitive advantage, depending on the market you're going to, but you foresee of course into the future that the demand is only going to increase on this.
00:22:36 Speaker 2
Absolutely.
00:22:37 Speaker 1
Do you have a lot of competition in this, or is it today you're very niche?
00:22:40 Speaker 2
Now in terms of the, the, the competition overall and the industries..?
00:22:44 Speaker 1
For this specific, for the green steel and these kinds of things…
00:22:47 Speaker 2
Yeah, of course. Like, you know, I'm sure they are but as I said like, you know, being much lower than the others and being like, you know, a pioneer in this I think we have a really good advantage now the products also play a big role today. We are producing longs which mainly go in construction and infrastructure where some and this is where we want to diversify a little bit also to really have more products that go in appliances and like know more of like you know applications that actually can really counter for like you know I would say to have more premium in terms of lower emissions or like lower carbon emissions in the products.
00:23:27 Speaker 2
But there's a lot, as I said there, there's a lot of acceptance. We see we see this is this is coming and for sure like you know perhaps in like you know 10 to 15 years, the studies say that you know the demand and low emission carbon low carbon emission steel will be higher and there will be there will be a premium for that.
00:23:46 Speaker 1
That's great. I wanted to also shift a bit and just ask you a bit about SME's. A company your size with your production capacity probably has a lot of players, can you comment just a bit on the support to the local economy that the company brings and the small players in the market that I'm sure are supported through you?
00:24:06 Speaker 2
Oh, absolutely. Look, one of the main reasons for establishing the company was actually to really support the downstream industry. Honestly, back in 1998, I would say like you know the reason, or the target, was to really establish a steel industry in the country that actually facilitate the development of the country - whether it's infrastructure or real estate - and at the same time is also to really have bulk manufacturer producers like us that actually feed the downstream with the steel industry. And I think this is something very, very important. So today we, as I said, we are using 3.5 million tonnes of, versus many products where those products can really go, you know steel is everywhere, you know, and those, a lot of these products can really go in a lot of applications.
00:25:04 Speaker 2
I'll give you an example from a small nail all the way to a spring in the car or in the engine of the car, or you name it. Or like you know, fasteners in and the aircraft and all that. And this is I think where Abu Dhabi is also playing and the whole way is playing like, you know, a good chance. I think you are also, like you know, you're part of it. To really support the SME's and I think there are a lot of opportunities for the downstream where we can really support them and give them our, let's say, high quality products to really go and produce the downstream with. That's like white goods or many, many of that. So, I think the chances there and we've been always supporting those SMEs.
00:25:49 Speaker 1
Yeah, fantastic. One last question I have is about the future of the company. Where do you see it going? How do you see it developing, er, if you wake up five years from now, where do you want the company to be at that point in time?
00:26:02 Speaker 2
Yeah. So, I think I would, I mentioned that before I would see the company as pioneering and producing and like you know one of the companies, the big companies, that is actually produce green steel. I would say that the chance is there. The company is well based on that. We have a study to grow…one of the things we have done lately actually - as you mentioned - we have changed our, we have done…
00:26:36 Speaker 1
Mm-hmm.
00:26:36 Speaker 2
…re-branding. And not only that, but we have done, we have changed our business model to become a group where, like, you know, the subsidies or like business units will be under the group. So, we have the steel now and the building material and that's actually open up for us to really add like more to our portfolios, more companies and like you know more into our portfolios, whether it's through M&A or like you know partnership and like you know acquisitions and all that…
00:27:03 Speaker 1
Interesting…
00:27:03 Speaker 2
…but it's around the sustainability as I said like you know we have a really great chance to really go there.
00:27:12 Speaker 2
Today, actually, proudly we are commissioning hydrogen, a small hydrogen pilot plant in our facilities.
00:27:21 Speaker 2
This is where we are going to reproduce hydrogen actually to be injected in the reactor for for us to reproduce a pure green steel…
00:27:30 Speaker 1
That's amazing.
00:27:30 Speaker 2
…and this is coming, Insha’allah, very soon.
00:27:32 Speaker 1
That's amazing, Your Excellency Saeed Al Remeithi, thank you so much for your time today. I wish you and the company all the best, mashallah, these amazing things that you just explained to us. I wish you all the best and thank you for coming again.
00:27:44 Speaker 2
Thank you. Thank you for receiving me. Thank you.
00:27:45 Speaker 1
Thank you.
OUTRO V/O: Economic impact: Conversations from Emirates Development Bank.