Saudi Arabia's National Industrial Development Center (NIDC) has signed a memorandum of understanding with Vale to develop a 4 million tonnes/year capacity high-quality iron ore pellet production facility in Ras Al-Khair Industrial City. The site on the kingdom’s east coast will also have a logistics centre, Kallanish notes.

The investment aligns with Saudi Arabia’s recently announced National Industrial Strategy and is the result of growing steel demand in Saudi Arabia.

The project aims to ensure sustainable feedstock supply at an estimated investment cost of SAR 4 billion ($1.06 billion). It will create 400 direct jobs in its initial phase.

"Driven by the Kingdom's strong economic growth in the construction and industrial sectors, domestic steel demand is growing rapidly, as more production capacity is needed to meet the growth in demand. NIDC, under the guidance of MIM [Ministry of Industry and Mineral Resources], has identified more than 5 million tonnes of annual steel capacity to be added to the Kingdom's industrial base, which already has more than 16mt of annual capacity,” NIDC says.

"The new capacity will support new steel products, targeting advanced sectors such as military, packaging, shipbuilding, oil and gas, automobiles, and others. Iron ore pellets, the main feedstock for steelmaking, have been identified by NIDC as a critical component necessary to ensure an uninterrupted supply of raw materials to the local industry. They [NIDC] have been working with international partners to develop local iron ore pellet capabilities,” it concludes.

"It is a sage decision and move because, if it materialises, the facility will feed a big portion of direct reduced iron production in Saudi Arabia,” comments a local senior mill official.

In 2021, Saudi Arabia was fourth-largest DRI producer after India, Iran and Russia, with production of 6.4mt.

NIDC was represented at the MoU signing ceremony by its chief executive, Dr Abdulrahman Al-Qurtas, while Vale was represented by its ceo, Eduardo Bartolomeo.

Vale already has 11m t/y of iron ore pellet production capacity in Oman. 

To diversify and secure raw material supply, Sabic has established a Mauritania-based iron ore mining joint venture with local authorities to feed its subsidiary and Saudi’s largest steelmaker Hadeed. The first ore cargo is to be shipped by 2024 (see Kallanish passim). It will produce up to 10 million tonnes/year of 67-68% Fe and below 2% silica content DR-grade pellet from 35-38% Fe magnetite iron ore.