Brazil's Vale, Saudi Arabia's NIDC sign MOU for iron ore pellet plant

Brazilian mining group Vale and Saudi Arabia's National Industrial Development Center have signed a memorandum of understanding which includes the development of a 4 million mt/year iron ore pellet plant in Ras Al-Khair Industrial City, in the Persian Gulf, according to the NIDC.

The MOU is to study the development of a high-quality iron ore logistics and processing facility, according to an NIDC statement circulated on Oct. 30. Ras Al-Khair is close to the industrial port city of Al Jubail, which currently imports pellets for direct-reduced iron, or DRI, plants.

The plant producing lower-emissions pellets, which are able to be used in natural gas and hydrogen-based iron and steel plants, would be only the second such facility in the Arabian Peninsula. A shortage in suitable seaborne pellet feed iron ore supplies, especially for high-grade low impurity DR pellets, had limited expansion in pellet plants outside China and India which have domestic supplies, while technological advancements are looking at adapting iron ore and metallic iron smelting processes to be able to use lower quality grades.

This follows Vale's investment in Oman at Sohar, which has two pellet plants supplying markets such as Saudi Arabia and the UAE. Companies have plans for further pellet plants in Oman and the UAE to meet growing steel demand and interest in lower-emission steel raw materials.

"The MOU aims to develop a high-quality iron ore pellet processing facility and logistics center in Ras Al-Khair Industrial City," and was signed at Saudi Arabia's Future Investment Initiative, the NIDC said in a statement. The project is expected to cost Saudi Riyal 4 billion ($1.1 billion), the statement said. The sixth Future Investment Initiative conference took place at the end of October in Riyadh.

Demand for steel is growing rapidly led by construction and industry, it said. The NIDC, under the guidance of the Ministry of Industry and Mineral Resources, has identified more than 5 million mt/year of steel capacity to be added in Saudi Arabia, in addition to more than 16 million mt/year of existing capacity, which uses pellets as feedstock. Saudi Arabia's primary steel production is via DRI, at plants operated by SABIC.

"The new capacity will support the addition of new steel products targeting advanced sectors such as the military, packaging, shipbuilding, oil and gas, automobiles, and others," the NIDC said.

"Iron ore pellets, the main feedstock for steelmaking, have been identified by NIDC as a critical component necessary to ensure an uninterrupted supply of raw materials to the local industry, and [NIDC has] been working with international partners to develop local iron ore pellet capabilities," it added.

Saudi crude steel production over the first nine months of 2022 increased 3.1% on the year to 6.95 million mt, with Saudi DRI output up 21% to 5.44 million mt, according to the latest data from World Steel Association.

Meanwhile, Jindal Shadeed Iron & Steel has planned a new 6 million mt/year pellet plant in Sohar, scheduled to be operational by the end of 2023, according to contractor Metso Outotec. Jindal Shadeed has a DRI facility supplying the feedstock for long steel production.

Additionally, in the UAE, Itochu and JFE Steel have tied up with Emirates Steel Arkan to source and process iron ore and produce DRI with low emissions for export.