The South Korean contractor STX Heavy industries is still in negotiations over the $3bn engineering, procurement and construction (EPC) contract for the 3 million tonne-a-year (t/y) Basra steel mill project with Iraq’s Industry and Minerals Ministry, a source close to the deal has told MEED.

The source says that contract conditions are still being finalised, although the contract is due to be signed in the second quarter of 2010.

“STX is still under negotiations,” the source says. “It’s a large project, the overall EPC is $3bn, but phase one is $730m and that will include the construction of a direct reduction plant; an electric furnace to build rebar and a power generation plant.”

“The project involves either two or three phases as part of a gradual expansion,” he adds.  

The source also says that the completion date is 42 months after the contract is signed, which includes time to resolve any future obstacles in the execution of the contract.

When fully completed, the Basra steel mill will have a capacity of 1.2 million-t/y of iron bars; 600,000-t/y of section steel; 1.2 million-t/y of hot-rolled products and a 500MW power station.

The State Company for Iron and Steel (SCIS) will operate the complex on completion.