Vale (Brazil) may invest US$ 1 billion in Oman
Brazilian mining company Vale do Rio Doce and the government of Oman have signed an agreement for the construction of an iron ore pelletization plant and a distribution centre at the Port of Sohar, located 240 kilometres to the northeast of the sultanate's capital, Muscat. The news was published this weekend by newspaper Oman Observer and by news agency Reuters. The company should invest US$ 1 billion in the project.When addressed by ANBA, the press office at Vale informed that the company is really interested in building a pelletization plant in the country, and that it has already signed a Memorandum of Understanding on the issue with the local government. The office claims, however, that it does not possess data regarding the amount to be invested, and that the project needs approval from the board of managers at the company.
In November 2006, Vale signed a memorandum with the Sohar Industrial Port Company (SIPC), the company that manages the port, controlled by the government of Oman and by the Port of Rotterdam, Netherlands.
According to newspaper Oman Observer, the land lease agreement was signed last week, in Rotterdam, between the minister of Industry and Trade of the sultanate, and chairman of SIPC, Maqbool bin Ali Sultan, and the Logistics executive director at Vale, Eduardo Bartolomeo, and by the company manager in Oman, Sérgio Leite. The Omani newspaper pointed out that the agreement must still be approved by the board at the mining company.
According to the newspaper and Reuters, in case of approval, production should begin next year. SIPC is going to expand the draft of one area of the port so that it may receive large vessels carrying iron ore. The port is strategically located at the entrance of the Strait of Hormuz, which connects the Arabian Gulf to the Indian Ocean, permitting the supply of products to the Middle East, where ironworks is in expansion, and to other regions in Asia.
On announcing the memorandum of understanding with SIPC, Vale informed that, if the project goes ahead, the factory should have a capacity for production of 7.5 million tonnes of pellets per year through the direct reduction process, which uses natural gas as a fuel. The commodity is abundant in the region.
Ore, especially iron, is among the main products sold by Brazil to the Arab market, losing only to meats and sugar. According to the Ministry of Development, Industry and Foreign Trade of Brazil, exports of the product to the region generated US$ 228.3 million in the first four months of the year.
To Oman, Brazilian shipments generated US$ 38 million between January and April, being the main items traded chicken and beef, eggs, dairy products, canned meats and capital goods.
The economy of Oman, as is the case with other countries in the Gulf, is fuelled mainly by the oil and gas sector. According to information disclosed by the Arab Brazilian Chamber of Commerce, other important producers are the ironworks, textile and food industries, with agriculture and fisheries, despite having a small share of the Gross Domestic Product, being traditional activities.
The Omani GDP reached US$ 38.9 billion in 2007, according to estimates by the Economist Intelligence Unity (EIU), an economic information service provided by the group that publishes British magazine The Economist. The economy of the Arab country grew on average 5% a year over the last five years, according to EIU. The country population is 2.7 million people.
Vale do Rio Doce, one of the largest mining companies in the world, had revenues of over US$ 8 billion in the first quarter of this year, an increase of 4.8% over the same period last year. The net profit was US$ 2.021 billion, a reduction of 8.8% in comparison with the first three months of 2007.