The promoters of an integrated steel mill planned at Sur have their sights on the Sultanate's substantial iron ore resources for use as raw material for the upcoming project.

Sun Metals LLC, a locally incorporated firm set up by a group of Indian-based investors, is gearing up to commence construction work on a 1.2 million tonnes per annum (tpa) capacity steel mill at the Sur Industrial Estate. The planned venture is set to be the first major non-hydrocarbon-based industrial investment in the Sharqiyah North and South Governorates, with the potential to catalyse further investment inflows into this important region of the Sultanate.

'We plan to set up a beneficiation unit that will upgrade locally sourced iron ore into steel grade feedstock for our project. This is in line with our commitment to utilising, wherever possible, locally available resources and thereby contributing to the commercialisation of this country’s mineral wealth,' said P T Sivarajan, Director — Operations, Sun Metals.

In comments to the Observer, Sivarajan said the steel mill’s requirement of iron ore as feedstock is proposed to be sourced from nearby Ibra – the site of a substantial iron ore mine. Although billed by previous surveys as low-grade, studies conducted by an Australian firm have shown that the ore is suitable as a raw material if sufficiently concentrated in a beneficiation plant.

'We are confident that Omani iron ore is as good as ore from any other country. We have invested quite a bit of money in studying this resource and testing it as well. Following a series of tests also undertaken in China and India, we have now gone ahead and put together our own state-of-the-art beneficiation circuits to demonstrate the feasibility of using this resource for the mill.'

According to the official, the mill’s iron ore requirements are estimated at roughly 1.6 times its capacity. Thus, a 1.2 mtpa project will require around 2 million tonnes of iron ore, of which 30 per cent must be scrap.

Work on Sun Metal's Steel Melt Shop, initially with a capacity of 600,000 tonnes per annum, is expected to begin in earnest just after the holy month of Ramadhan, the Projects Director said. Oxygen required for the Melt Shop will come from a dedicated oxygen plant that will be built at site by a Qatari firm under a BOOT arrangement.

Furthermore, for want of natural gas as energy for the project, Sun Metals is weighing alternative energy resources including synthetic fuels, said Sivarajan. 'We are working on two things: If we do get sufficient volumes of liquefied petroleum gas (LPG), then our energy needs will have been met. But if that doesn’t happen, we will go in for synthetic gas. We are working on a tie-up with National Gas for a synthetic gas plant. We are also negotiating with an American company that has come up with the technology to covert petrol into gas.”

Sun Metal’s integrated steel mill will comprise a number of key components, including a raw material preparation unit, pellet plant, Direct Reduction Iron (DRI) unit, and Steel Melt Shop with continuous casting unit. The latter will produce billets, blooms and slabs for conversion into a variety of steel products. Also envisaged is a rolling mill designed to produce a variety of steel products, including flat products, coils, galvanised products and steel goods cut to length.
The project will initially produce around 600,000 tonnes per annum of billets and blooms, which has the potential to spawn investments in downstream and ancillary ventures all around Sur. Phase 1 of the project is slated to come into operation before the end of 2013.

In addition to generating around 450 jobs, Sun Metals also plans to promote a culture of ‘quasi-entrepreneurship’ in the Sur area, says Sivarajan. “As part of our normal operations, we envision the need for 150-200 heavy trucks that will be used in the transport of raw materials and finished goods, in addition to a major fleet of passenger vehicles and goods carriers. We would like to encourage Omani drivers to invest in their own vehicles against long-term transportation contracts that would enable them to obtain bank loans against firm guarantees from us. Thus, we will not only be providing them with employment, but also encourage them to be entrepreneurs as well. In the upshot, Omanisation at the outset of operations is projected at around 66 per cent.”