Luxembourg-based steel giant ArcelorMittal has signed a memorandum of understanding with Turkey’s Dayen that will see the companies jointly build a $130m steel mill fed on scrap metal at Sulaimaniyah in northern Iraq.

Once an initial phase of construction has been completed, the facility will produce 250,000 tonnes a year (t/y) of reinforced steel bars (rebars) used in the construction industry. The plant will be fed by locally-sourced scrap metal.

The partners want to start building the plant in the second quarter of 2010, with production set for the fourth quarter of 2014.

Neither ArcelorMittal or Dayen was available for comment on an engineering, procurement and construction deal to build the mill.

ArcelorMittal, one of the world’s largest steel manufacturers, has relatively modest operations in the Middle East and North Africa. However, the company is building a seamless steel pipe mill in Saudi Arabia and a steel facility on the Red Sea coast of Egypt, as well as the proposed Iraqi mill.