Brazil’s Vale has invited at least one strategic partner to participate in its $1.35bn iron ore pelletising plant located at Sohar Port in Oman due to concerns regarding gas allocations, a source familiar with the project tells MEED.
The source says that the mining conglomerate has approached Kuwait’s Gulf United Steel Holding Company (Foulath) about potentially taking a shareholding in the self-funded complex, which on completion will house a two-train iron ore pelletising plant with an initial production capacity of 9 million tonnes-a-year (t/y).
“Vale is worried about the gas allocation and has approached Foulath to discuss joining forces with them,” the source says. “However, Foulath told them it was too late and they did not want to be involved.”
Vale in numbers
- Employees: 100,000+
- Profits in 2009: $5.3bn
- Vale’s annual global iron ore pellet production: 250million tonnes
- Investment budget for 2010: $12.5bn
Foulath could offer a solution to Vale’s fears that it might not get a full gas allocation because Foulath’s main shareholder is the Gulf Investment Corporation (GIC), an asset management company that is equally owned by the member states of the GCC, including Oman.
The pelletising plant, which will make iron pellets essential to the steel making industry, will be supplied with iron ore from Vale and cover an area of 1 million square metres. The complex will also include a distribution centre with a throughput capacity of around 40 million-t/y.
Foulath’s reluctance to be involved may stem from the fact that the company is planning its own $700m, 7 million-t/y pelletising plant in the sultanate, located at the southern port city of Salalah. However, the Foulath plant will use oil and not gas as its primary fuel source and work will only press ahead when it secures enough markets for its pellets. The plant is a joint venture with Japan’s JFE Steel Corporation.
GIC owns 50 per cent of Foulath. A further 25 per cent is owned by Qatar Steel, 10 per cent each by the Kharafi Group of Kuwait and the National Industries Group of Kuwait, and 5 per cent by the Kuwait Foundry Company. Vale is one of the largest mining companies in the world as well as one of the largest producers of iron ore pellets.