Vale International enters into a LOI for Supplying Iron Ore Agglomerates to Essar Group's KSA Green Steel Project

8 September 2023

Vale International, a wholly-owned subsidiary of Vale SA, a prominent global mining company specializing in Brazilian iron ore and iron ore agglomerates, has forged a strategic partnership with the multinational conglomerate Essar Group. This collaboration is geared towards supplying iron ore agglomerates for the Green Steel Arabia (GSA) project, with a Letter of Intent (LOI) officially signed on September 1, 2023.

Under this partnership, Vale will provide Essar Group with an annual supply of 4 million tonnes of Iron Ore Agglomerates, including DR grade pellets and briquettes. Vale, with operations spanning Brazil and Oman, is a recognized leader in delivering high-quality raw materials to Integrated Steel Producers worldwide.

Mr. Andre Figueiredo, Vale's Regional Director, expressed his thoughts on the occasion, stating, "Vale International's LOI with Essar for the annual supply of 4 million tonnes of high-grade Iron Ore Agglomerated products signifies our long-term commitment to meet the growing demand for raw materials in the steel industry, especially in the Middle East. Vale's portfolio of high-grade Iron Ore agglomerates will have a direct positive impact in terms of added value, price competitiveness, and the potential for a lower Carbon footprint, thereby promoting the expansion of the low CO2 emission steel industry. We are immensely excited to collaborate with Essar Group's pioneering green steel project in Saudi Arabia."

Mr. Naushad Ansari, Country Head for Essar Group in KSA, added his perspective, stating, "Essar is looking to invest around USD 4.5 billion in establishing an integrated steel plant in Ras Al Khair, Saudi Arabia. Through this LOI with Vale, along with a previous LOI with Bahrain Steel, we have secured 100% of the raw material supply of iron ore feed for the Saudi Steel Plant. Our plan is to commence production in 2027, and we are confident about replacing flat steel imports into Saudi Arabia and the GCC region with our diverse product range."

The Essar project aspires to become the region's pioneering Green Steel initiative, aiming to set a global benchmark for reducing CO2 emissions. It will encompass a direct reduced iron (DRI) capacity of 5.0 million tonnes per annum (mtpa), comprising two modules of 2.50 mtpa each. Additionally, the project will include a hot strip capacity of 4.0 mtpa, along with 1.0 million tonnes of cold rolling capacity, galvanizing, and tin plate lines.

Aligned with the Kingdom's rising demand for steel products and the objectives outlined in Vision 2030, the facility will serve critical steel-consuming sectors, including Construction, Oil & Gas, Automotive, Packaging, and General Engineering.