SOHAR, OMAN // The Brazilian mining giant Vale says it has reached full production capacity at its new iron-ore pellet plant in the Omani port of Sohar, and is preparing to double its output in the coming year.
Iron ore pellets are a basic component in steel making, and the plant is producing them at a rate of 9 million tonnes a year.
The complex, which Vale began commissioning in February last year and includes a major new deepwater terminal and distribution facility, is a joint venture with the Omani government. Vale has invested more than US$1.36 billion (Dh4.99bn) in the facility, with Oman contributing a further $750m in infrastructure.
The project is part of Vale's strategy to keep ahead of steel demand in the Middle East and South East Asia over the next decade. In co-operation with the Omani government, the facility will be used to encourage further industrialisation in the region.
"The company's pelletising plant and distribution centre, together with a floating transfer station in Subic Bay in the Philippines, a distribution centre and port under construction in Malaysia, are part of Vale's strategy to increase its flexibility and competitiveness in serving the world's fastest growing markets," Marcos Beluco, Vale's country manager in Oman, said yesterday.
"The capacity and location of this complex will assist in creating a natural pull for downstream industries, attracting large multinational companies to the region, which will in turn provide a greater incentive for service industries to capitalise on the sultanate's competitive advantage," Mr Beluco said.
Vale's complex comprises two pelletising units, each with a nominal production capacity of 4.5 million tonnes of direct-reduction pellets per year, and a distribution centre with a throughput capacity of 40 million tonnes per year. The company's first production line began operations last April, supplying pellets to key steel producers in the region.
The mining company also partnered with Sohar Industrial Port Company to build a 1.4-kilometre-long, deepwater terminal, one of the first in the world capable of receiving very large ore carriers (VLOCs) with cargo capacities of 400,000 tonnes.
Vale also announced an agreement with the Oman Shipping Company to build four VLOCs exclusively to ship iron ore from the company's mines in Brazil to Sohar. Two vessels are scheduled to enter service by the middle of this year and the other two by the end of the year.
Vale has also signed a 20-year contract with Majan Electricity to supply the 93 megawatts of electricity a year the complex requires.
Murilo Ferreira, the president and chief executive of Vale, said at a ceremony in Sohar yesterday to mark the plant's achievement that it was already delivering 500,000 tonnes of pellets locally and had signed up 12 customers in the region, with interest being expressed by potential customers in Saudi Arabia, the UAE and India.
"We expect to have to double our capacity in the near term, to go to 18 million tonnes of pellets every year, very soon," he said.
Vale also expects to fill its major distribution capacity.
"We already have teams out in Oman exploring the potential for copper and phosphates. It will all be down to the geology," Mr Ferreira said.
The company's operations in Oman employ 1,200 on site, with 3,120 jobs generated indirectly. Vale says it has achieved an Omanisation rate of more than 60 per cent among its direct employees.