The Essar Group has inked a letter of intent (LOI) with Bahrain Steel, a subsidiary of Foulath, to source high-grade iron ore pellets for its forthcoming integrated steel plant in Ras Al Khair, Saudi Arabia.
As per the terms of the arrangement, Bahrain Steel will supply 4 million tonnes per annum (mtpa) of direction reduction (DR)-grade pellets to the Essar Group. Bahrain Steel, the only Gulf Cooperation Council (GCC) owned pellet producer, is a leading provider of high-quality DR-grade pellets to all integrated steel producers in the region, as highlighted in the statement. The LOI signing ceremony took place on Wednesday in Jubail, Saudi Arabia (KSA).
Naushad Ansari, Country Head for Essar Group in KSA, remarked that Essar is contemplating an investment of approximately $4.5 billion to establish an integrated steel plant in Ras Al Khair, Saudi Arabia. He added, “This LOI, once final contracts are agreed and signed, will secure 50 per cent of the raw material supply of iron ore pellets for the Saudi steel plant. If everything proceeds according to plan, we anticipate commercial production to commence from the year 2027.”
Dilip George, Group CEO of Foulath Holding, stated, “Bahrain Steel’s LOI with Essar for the annual supply of 4 million tonnes of DR-grade pellets is a manifestation of our commitment to catering to the increasing demand for DR pellets in the steel industry in the GCC.” He continued, “We are honoured to join hands with Essar Group to back their trailblazing project for launching the first green steel project in Saudi Arabia, where sustainable development is becoming a growing priority.”
The Essar project, set to be the region’s inaugural green steel initiative, aspires to establish a global standard in CO2 reduction. The facility will encompass a direct reduced iron (DRI) capacity of 5 mtpa, divided into two modules of 2.5 mtpa each, in addition to a 4.0 mtpa hot strip capacity, and 1 mt of cold rolling capacity, complete with galvanising and tin plate lines.
The establishment is designed to cater to all principal steel-consuming industries, including construction, oil and gas, automotive, packaging, and general engineering.