Oman's Sur steel plant considering Duqm for relocating project

13 April 2015

A 2.5 million tonne per annum steel plant, which is planned in Sur, may be shifted to Duqm, if the promoters do not receive permission from the government for mid-sea unloading of imported scrap.

The proposed $400 million-project needs a good port facility to import 2.5 million tonnes of scrap metals, mainly from Europe, as its major raw material for producing 2.5 million tonnes of liquid steel, used for making special steel and re-bars. The company plans to use DRI and scrap metals to a certain proportion for making liquid steel.

Unloading in mid-sea is a practice in other countries. "But as for scrap, we do not know whether we will receive permission for doing so mid-sea," said P T Sivarajan, director of operations at Sun Metals, which is developing the project.

"We will be able to take a decision only when we come to know about it. If we don't get permission, we will have to shift the project to Duqm due to good port facility and all other infrastructure." However, he noted that power has not yet been made available in Duqm.

Sur does not have enough space for building a jetty facility. "We have conducted some study on that as well," added Sivarajan.  

Sivarajan also said that the promoters have already signed a contract with Posco Engineering and Construction, Korea, for Pepcom (planning, engineering, procurement, construction, operation and maintenance) services. Another agreement was signed with Sojitz Corporation, Japan, for support of in-take, off-take and co-development. "They are doing our market analysis." Yet another agreement for power purchase was also signed. A feasibility study was also completed by the company in-house.
The construction work will start only after finalising the location. A decision on best location will be taken by the end of the month, he added.

Sivarajan said that the project would be the first special steel production facility in the entire Mena region. Special steel is mainly used for automobile industry.

"We will be the most competitive producer."

Sivarajan also said that it takes 30 months to complete construction work of the project, if it comes up in Sur. However, if it is relocated to Duqm, the project will take more time since large-scale power will be available in Duqm only in the third quarter of 2018.

Talking about funding the $400 million project, he said the project would be funded by way of $122 million equity and the remaining funds will be from financial institutions.

Most of the steel products are for the domestic market and the larger Gulf region.