MUSCAT -- Freezone Sohar is keenly exploring the potential for establishing a Steel Cluster dedicated primarily to industrial investments downstream to the world-scale metallurgical projects set up at the nearby Port of Sohar. According to a top official of Sohar Free Zone LLC, which is developing the ambitious special economic zone adjacent to the port, the Steel Cluster initiative is being pursued in collaboration with the state-owned energy investment vehicle, Oman Oil Company SAOC.
Freezone Sohar is looking to devote an area of 400-500 hectares to a Steel Cluster downstream to the steel projects in operation and under development at the port, said Jamal T Aziz, Deputy CEO of the Port of Sohar and Chief Operating Officer of Sohar Free Zone LLC. "This cluster is being planned together with the government. We are working with Oman Oil Company and the Government of Oman in promoting the Steel Cluster," the official stated at a special briefing held last week to highlight investment opportunities at the Sultanate's biggest free zone development.
Significantly, the Steel Cluster is one of several dedicated clusters envisioned at the 4,500-hectare free zone over the next several years. Envisaged in the first phase, covering a total leasable area of around 350 hectares, are three clusters devoted primarily to investments related to Logistics and Warehousing (200 hectares), Light Manufacturing (100 hectares), and Industry (150 hectares). Already, some seven companies have already obtained leases to set up operations as part of the Phase 1 development of the scheme.
Also on the anvil is a dedicated cluster earmarked exclusively for Educational and Medical Services, the official said, noting that an area of 50-60 hectares will be allocated for such investments. According to Jamal, the proposed Steel Cluster represents a unique value proposition to investors, given especially Freezone Sohar's proximity to a slew of iron and steel ventures currently in operation or nearing completion at the adjoining industrial port.
In particular, the newly launched steel mill of Jindal-Shadeed, and the soon-to-be-operational iron ore pelletising scheme of Vale Oman, promise to underpin the growth of downstream steel investments at the free zone, he noted. Jindal-Shadeed's fully integrated steel complex at Sohar Port is due to commence commercial operations next month. At the heart of the project is a world-scale Direct Reduction Iron (DRI) plant with a capacity to produce 1.5 million tons of hot briquetted iron (HBI) per annum.
In the next stage of the project's development, Jindal-Shadeed also plans to bring into operation its high-tech Steel Melt Shop, boasting a capacity to produce 1.5 million tons per annum of steel billets, by 2012. Brazilian mining conglomerate's local subsidiary Vale Oman is also close to completing work on its giant pelletising plant capable of producing 9 million metric tons of DRI pellets annually. The $1.35 billion project also features a regional distribution centre with a handling capacity of 40 million metric tons.
Both ventures, according to Jamal, have the potential to create synergies that make downstream steel-related investment an attractive proposition for local, regional and international investors. DRI, in particular, is a key raw material in the manufacture of hot briquetted iron (HBI) and sponge iron, while also serving as a feedstock for melt shops, and casting iron and rolling mills.
Also part of Freezone Sohar's unique value proposition, the official pointed out, is the logistics advantage that investors can leverage to access markets in the Gulf, Indian sub-continent and the wider Middle East region. Excellent connectivity afforded by a world-class seaport and road network - and rail and air access in the future - further underscores the free zone's investment appeal, he noted.
Oman Oil subsidiary Takamul is expected to play a key part in the development and promotion of downstream investments in and around Sohar. The company is behind the successful launch of a number of downstream aluminium units, and is keenly exploring investment opportunities that can utilise feedstock from the petrochemical and metallurgical projects in operation at the industrial port.
© Oman Daily Observer 2011
