|01 May, 2019

Bahrain Steel Signs 20-Year Pellet Feed Agreement with Anglo American Supporting Enhanced Production Capacity and Sustained Growth

Contract valued at approximately USD 15 billion over deal lifetime 

Bahrain Steel Signs 20-Year Pellet Feed Agreement with Anglo American Supporting Enhanced Production Capacity and Sustained Growth

Bahrain: Bahrain Steel BSC (The Company) today announced that it has signed a 20-year agreement with Anglo American Marketing Limited (Anglo American) for the supply of pellet feed for its pelletising plants located in Hidd in the Kingdom of Bahrain. The contract, which is valued at approximately USD 15 billion over its duration and will reach a total of 8 million wet metric tons a year, provides Bahrain Steel with approximately 60% of its expected needs for pellet feed at its annual rated capacity of 12 million tons of finished pellets, making the contract a significant milestone in its strategy to maintain full production capacity and the uninterrupted delivery of high quality iron ore pellets to steel producers it supplies around the world.

Signed in London, where Anglo American is headquartered, the agreement provides for iron ore grade to be supplied at a minimum 67% Fe and 2% or less total gangue. Deliveries under the contract have already started, sourced exclusively from Anglo American’s Minas-Rio mine in Brazil.

Bahrain Steel’s pellets are used for steelmaking using either the Direct Reduced/Electric Arc Furnace or the Blast Furnace/Basic Oxygen Furnace route. The Company’s growth is being driven by its reputation as a reliable supplier of consistent quality Direct Reduction (DR) grade iron ore pellets and currently it has an estimated 26% share of the iron ore pellet market in the Gulf Cooperation Council (GCC) countries, where demand is put at approximately 22 million tons a year and growing. As per a report produced by McKinsey, the demand for iron ore pellets is set to increase in the seaborne markets with the MENA region continuing to be the main driver of growth in demand for seaborne pellets at a rate of 2.6% to reach a total demand of 46 million tons by 2027.

Chairman of Bahrain Steel, Mr. Khalid Al Bassam, who was in the UK to sign the agreement, said, “We are delighted to have reached this momentous deal with Anglo American, which will provide important safeguards to the pellet feed supply required to serve the needs of our customers in the MENA region and beyond, which are increasingly relying on Bahrain Steel for their supply of DR pellets.”

 “From May 2018, we have been involved in intense negotiation with Anglo American to agree this new mutually beneficial 2019 supply agreement, which replaces an earlier 2012 agreement. The discussions were conducted by a Board sub-committee under the Chairmanship of my colleague, Board Member Mr. Khaled Al Sabah, supported by our Group CEO, Mr. Dilip George, and a team of senior management. The thanks of the Company and its shareholders go to them for their hard work in bringing these negotiations to a highly successful conclusion.”

Peter Whitcutt, CEO Marketing, Anglo American said, ”We are thrilled by our new partnership with Bahrain Steel. This long-term agreement allows us to increase our support to the steel industry, extending the reach of our high-grade ore throughout the MENA region. We look forward to working together with Bahrain Steel to develop our business together over the next twenty years.”

“Mr. George added, “With the conclusion of this iron ore supply agreement with Anglo American, Bahrain Steel is now better positioned than ever to continue to meet the needs of our customers while also providing operational benefits. In line with customer demands, these supplies enable us to produce high grade DR pellets with Fe levels of over 67% with combined silica and alumina levels of less than 2.5% and BF pellets that have Fe levels of 65% with combined silica and alumina levels of 3.5%. Furthermore, with Anglo American now providing nearly 60% of our needed iron ore feedstock, we are significantly cutting the number of different ore types used to produce our pellets, which will result in improved efficiency and production.”

Anglo American is a leading global mining organisation with operations in various parts of the world, producing iron ore, diamonds, platinum group metals, copper, nickel, coal and manganese and employing 90,000 people.

Its Minas-Rio mine in the Minas Gerais region of Brazil is one of the largest in the world, rated at an annual output of 26.5 million metric tons, with a guide for 2019 of 18-20 million tons.

Bahrain Steel is the world’s largest merchant pelletiser, which means it is not attached to a captive mine, giving the Company scope and independence to negotiate its own deals for iron ore supply. Currently, Bahrain Steel sources iron ore from Brazil, Chile, Sweden and Canada.

Bahrain Steel is owned 100% by Foulath Holding Co, which in turn is owned 50% by Gulf Investment Corporation GSC, Kuwait; 25% by Qatar Steel Company QSC, Qatar; 10% by Gulf Cables & Electrical Industries Company KSC, Kuwait; 10% by National Industries Group Holding SAK, Kuwait and 5% by Kuwait Foundry Company SAK, Kuwait.

Based on a 1.3-kilometre site at Hidd, Bahrain Steel and other companies of Foulath represent an investment of USD 3.5 Billion.

-Ends-

For more information contact:
FinMark Communications
Zahraa Taher
Tel: +973 39630997 / +973 38831386
Email: ztaher@finmarkcoms.com 

© Press Release 2019

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