The man behind the launch of the $100 million United Gulf Steel (UGS) facility in Madinat Al Jubail AlSinaiyah is Mazen K Allahiq, the very epitome of a Saudi industrialist.

In fact in July 2000 when production of rolled steel began at the massive facility, UGS could pride itself on being the first world-scale medium-section rolling mill in the region.

The idea for the mill is very much the brainchild of Allahiq with the project financed by a combination of shareholders' equity, long-term project finance and working-capital facilities. The Saudi Industrial Development Fund (SIDF) also provided long-term project finance for the project. Allahiq is a former commercial banker having dealt extensively with capital markets with the acumen to structure and encourage private sector participation in industry by consulting with banks to develop credit lines, working capital, bridging loans, financial vehicles and bonds.

"From the outset, the objective of UGS was to allow for the substitution of imported steel products both in Saudi Arabia and across the region by local production. Such a strategy is in line with the overall objectives of UGS with a policy of self-reliance implicit in the industrialisation policy of the Kingdom," says Allahiq.

Allahiq is very much the strategic technocrat, assessing and analysing how best the industrial and economic growth objectives of the Kingdom can be achieved. He could also be called a venture capitalist as he applies his extensive banking experience to ensure that industrial facilities such as UGS and Saudi Formaldehyde Chemical Company Ltd succeed.

Saudi Formaldehyde with its private investors drawn from five GCC countries first launched commercial production in 1991 from its Jubail facilities sourcing feedstock from various Sabic plants. According to Allahiq, Saudi Formaldehyde was the Kingdom's first private sector venture in the petrochemical sector. Within a decade Saudi Formaldehyde has grown from a production of 22,000 tonnes per year to 160,000 tonnes with its products exported to more than 40 countries.

UGS and Saudi Formaldehyde both meet the strategic objectives of import substitution, greater employment opportunities for Saudis, and increased participation by the private sector in the country's industrial development.

"Before the UGS facility was built, intensive market research and feasibility studies were conducted over a period of three years to identify the long-term steel requirements for the Kingdom and the region. We assessed the demand for medium sections and looked at overcapacity in the world market and determined the cost advantages in setting up in Jubail," adds Allahiq.

Allahiq is an economic realist and also knows that the launch of the commercial production of UGS has taken place in a market where dumping is widespread. But Allahiq sees the longer term and has been presenting data to government and other agencies to obtain a level playing field and put the necessary mechanisms in place.

A civil engineering graduate from the University of Nebraska, USA, Allahiq went on to do his Master's in business administration from the University of Texas, USA, majoring in economics and finance. He followed that up with an executive development programme at the Kellog Institute, one of the most reputed institutes. Before embarking on his entrepreneurial career, he held several management positions in Aramco and Al Bank Al Saudi Al Fransi.

"I think in an entrepreneurial and creative way and believe in solving problems, meeting challenges, being innovative in managing the risk factors and being disciplined and patient. You cannot rely on past successes but change is the rule in terms of reinventing the way one conducts business. Forecasting is also vitally important as one must anticipate demand and stay ahead of the game in terms of changing business cycles," says Allahiq.

In terms of the future development of UGS Allahiq is committed to the vision of making UGS a truly world-class integrated steel manufacturer providing high-value products. With demand for steel closely linked to overall economic activity, the increasing requirement for power generation in the region will help UGS in its growth based upon its geographical and logistical advantages compared with imported steel.

Allahiq sees UGS achieving about 70 per cent capacity utilisation by the end of 2002. Plans have been drawn up to expand the facility further with backward integration and also by widening the product range to include heavy sections. Within three to four years, UGS could well be a million-tonnes-per-annum production facility.

Allahiq is also set to expand in Jubail this year with a new private sector facility called Modecor for manufacturing laminated products with feedstock from Saudi Formaldehyde.