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Essar signs pact with Vale International for green steel initiative in Saudi Arab

The Essar Group, founded by the Ruia brothers, on Thursday signed a deal with Brazilian mining company Vale International to supply iron ore agglomerates for Essar’s Green Steel Arabia (GSA) project.

“Essar is looking at investing about $4.5 billion in setting up an integrated steel plant in Ras Al Khair, Saudi Arabia,” said Naushad Ansari, country head of Essar Group, in Saudi Arabia. “Through this letter of intent with Vale and the previous LoI with Bahrain Steel, we will have secured 100% of the raw material supply of iron ore feed for the Saudi Steel Plant.”

The plant will likely start production in 2027.

Ansari said Essar is confident of replacing the flat steel imports into Saudi Arabia and the GCC region with its bouquet of products.

As per the terms of the agreement, Vale will supply Essar with 4 million tonnes per annum (mtpa) of DR-grade pellets and briquettes.

Andre Figueiredo, Vale’s regional director, emphasized that the LoI represents the company’s long-term commitment to support the growing demand for raw materials in the steel sector. Figueiredo also noted that Vale’s high-grade iron ore products would offer advantages such as price competitiveness and a potential reduction in carbon footprint, particularly in the Middle East.

According to an Essar press release, the GSA project aims to be the region’s first green steel initiative, setting global standards in CO2 emission reduction. The release outlined the project’s planned capacities: 5.0 mtpa for direct reduced iron (DRI), 4.0 mtpa for hot strip, and 1.0 million tonnes for cold rolling, along with galvanizing and tin plate lines.

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