Oman to Invest $5 Billion in Domestic Steel Industry to Develop Diverse Economy

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Oman is set to become one of the chief steel producing nations in the Middle East. The government recently made an announcement stating that the country would invest $5 billion in its rapidly developing domestic steel industry. The announcement is part of the government's plan to reduce its dependency on the oil industry and develop a more diverse economy. The government hopes to increase the contribution of the manufacturing sector to about 15% of the nation's GDP by 2020.

Several new projects have been commissioned in the last few years. The steel plant of Sohar Steel LLC (Muscat, Oman) was commissioned in May this year. The plant produces 200,000 tons per year of continuous cast mild steel billets, which are used by the country's largest rebar producer, the Sharq Sohar Steel Rolling Mills LLC (Muscat). The 250,000-ton-per-year rebar producer intends to expand its capacity to 700,000 tons per year. Equipment specifications will be decided by the end of the year.

Oman's first fully integrated iron and steel plant is being set up by Shadeed Iron and Steel Company LLC (SIS) (Muscat). The plant is located in the Sohar Industrial Port. SIS is a subsidiary of Al Gaith Holdings PJSC (Abu Dhabi, United Arab Emirates) and the project involves an investment of $750 million. Phase I of the project includes setting up facilities to produce 1.5 million tons per year of Hot Direct Reduced Iron. Phase II includes installation of the 1.1-million-ton-per-year steel-billet-producing facility, and Phase III will include facilities to convert the billets to seamless bars, sections, and tubes. Construction of the project was started in 2005, and Phase I is scheduled to be completed by the end of 2008. The steel-making facility is expected to be completed in the second quarter of 2009. The company intends to ramp up the combined production capacity of the plant to 3.5 million tons per year by 2011 by both expanding capacity and increasing product diversity.

A 1-million-ton-per-year seamless steel tube plant is being set up by a joint venture between SIS and India's Jindal Saw Limited (BSE:500378) (New Delhi) in Sohar Industrial Port. This $ 4 billion mega-complex will have the first seamless steel plant in the region, and is expected to be commissioned later this year.

Danube Building Materials FZCO (Dubai), the largest company in the construction, interior decoration and shop-fitting industry in the region, has announced plans to invest about $13.6 million in a new steel plant to be set up in Mabella in Oman. The facility will also function as the center of logistics for all of Danube's operations in Oman. The steel plant will supply materials to all construction companies in Oman at competitive rates. Danube also intends to import steel products from China, India, Iran, Korea, Russia, Saudi Arabia, South Africa, Taiwan, and Ukraine and process them according to the requirements of domestic customers.

The availability of comparatively inexpensive gas in Oman makes it an attractive location for steel production. The Port of Sohar is developing rapidly and Oman is close to the export markets, which favors Oman's plan to become a large player in the region. The domestic consumption of steel is expected to reach 1.1 million tons per year by 2010.

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