Saudi Arabia - Vale, a global mining company and a leading producer of Brazilian iron ore and iron ore agglomerates, said one of its key subsidiaries, Vale International, has signed a Letter of Intent (LoI) with the multinational conglomerate Essar Group to supply iron ore agglomerates for its Green Steel Arabia (GSA) project.

To be set up at an investment of $4.5 billion by the Essar Group in Ras Al Khair region of Saudi Arabia, the GSA aims to be the first green steel initiative in the region, aspiring to set a global benchmark for reducing CO2 emissions.

Under this deal, Vale International will be supplying 4 million tonnes per annum (mtpa) of iron ore agglomerates (DR grade pellets and briquettes) to Essar for the GSA project.

On the contract win, Vale’s Regional Director Andre Figueiredo said this signifies the group's long-term commitment to meet the growing demand for raw materials by the steel industry, especially in the Middle East.

"Vale’s portfolio of high-grade iron ore agglomerates will have direct positive impact in terms of added value, price competitivity and potential lower carbon footprint, thus fostering the expansion of the low CO2 emission steel industry. We are immensely excited to associate with Essar Group’s pioneering green steel project in Saudi Arabia," stated Figueiredo.

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

The GSA plant will consist of a direct reduced iron (DRI) capacity of 5 million tonnes per annum (mtpa), comprising two modules of 2.50 mtpa each.

Furthermore, the project will include a hot strip capacity of 4 mtpa, along with 1 million tonnes of cold rolling capacity, as well as galvanising and tin plate lines, it added.

Ansari said the group plans to start production in 2027. "We are confident of replacing the flat steel imports into Saudi Arabia and the GCC region with our bouquet of products," he added.

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