MUSCAT, 18 March 2007 — Brazilian mining giant Companhia Vale do Rio Doce (CVRD), one of the world’s biggest metal and mining companies, plans to establish its regional base in the Sultanate of Oman, a top official of the company said.
José Luiz Amarante, director of CVRD International, told delegates attending the Arab Steel Summit 2007 last week that Oman had the potential to serve as a strategic hub for its wider business operations in the Middle East. As a first step, the company is in the process of establishing an office in Muscat, he said.
The global mining behemoth, which boasts a market capitalization of around $75 billion, is weighing plans to establish an iron ore pelletising plant at the Port of Sohar at an estimated cost of $1 billion. Last November, the company signed an MoU with Sohar Industrial Port Company (SIPC) — landlord and port authority of the Port of Sohar — to evaluate the feasibility of establishing the plant at the industrial port. The proposed location is a site originally earmarked for a special economic zone, which is being shifted to a far bigger area west of the port.
The proposed plant’s nominal capacity is envisioned to initially reach 7.5 million tons per year of pellets for direct reduction. Operations is set in 2010 with CVRD providing 100 percent of the iron ore used in the plant. Future expansions can scale up plant capacity to reach 22 million tonnes, Amarante said. According to the official, a number of factors lend to Sohar’s appeal as a suitable location for a pelletising plant. Besides boasting a deepwater port, Sohar can serve as a base from which CVRD can competitively transport iron ore pellets to its growing portfolio of customers in the Middle East. “We are very enthusiastic in terms of Sohar’s potential in this regard,” he said.
The company is also in discussion with SIPC for the development of deep draft facilities of around 25 meters to cater for very large ore carriers (VLOCs) and ultra large ore carriers (ULOCs). A pelletising plant at Sohar could serve as a source of supply for the many direct reduction projects in the Middle East, he explained, noting that CVRD has recently concluded supply arrangements with a number of steel-producing companies in the region.
CVRD is focused on the Middle East, which is growing at a faster rate than other regions of the world, Amarante said. Steel consumption is also growing at a remarkable rate in this region.
Demand for steel grew nine percent worldwide. This year, growth is projected at 5.2 percent, while demand in the Middle East is pegged at a high of 8.9 percent, he said. To meet the growing global appetite for iron ore, particularly in Asia and the Middle East, CVRD intends to increase production 13.6 percent to 300 million tons in 2007.
The company produced a record 276 million tons of iron ore and pellets in 2006. Iron-ore production for 2008 is projected to rise to 320 million tons. Pellet production capacity is being expanded from 36 million to 50 million tons per annum. CVRD, which has a presence in 16 countries on five continents, is also an important global producer of copper, bauxite, alumina, aluminum, potassium, kaolin, manganese and iron alloys.