The Ruia brothers' Essar Group has struck an agreement with Brazilian mining giant Vale International to provide iron ore agglomerates for Essar's Green Steel Arabia (GSA) project.
“Essar is looking at investing about $4.5 billion in setting up an integrated steel plant in Ras Al Khair, Saudi Arabia," said Naushad Ansari, country head of Essar Group, in Saudi Arabia. “Through this letter of intent with Vale and the previous LoI with Bahrain Steel, we will have secured 100% of the raw material supply of iron ore feed for the Saudi Steel Plant."
The project is expected to begin production in 2027. Ansari stated that Essar is confident in its ability to replace flat steel imports into Saudi Arabia and the GCC area with its product portfolio. Vale will provide Essar with 4 million tonnes per year (mtpa) of DR-grade pellets and briquettes under the terms of the deal.
Vale's regional director, Andre Figueiredo, stressed that the LoI shows the company's long-term commitment to meeting the expanding demand for raw materials in the steel sector. Figueiredo also stated that Vale's high-grade iron ore products will provide benefits such as price competitiveness and possible carbon footprint reduction, particularly in the Middle East. Figueiredo believes that this might spur the expansion of the low-CO2 steel sector.
The GSA project intends to be the region's first green steel program, establishing worldwide CO2 emission reduction criteria. The project's projected capacity are as follows: 5.0 mtpa for direct reduction iron (DRI), 4.0 mtpa for hot strip, and 1.0 million tonnes for cold rolling, as well as galvanizing and tin plate lines.