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Oil price dip stalls $400m Oman steel plant

The global drop in oil and steel prices has suspended the 2.5 million-tonne capacity plant in Sur, according to an official from the project's builder, Sun Metals

Sun Metals had been picked to develop the steel plant in Oman's Sur area. [Representational image]
Sun Metals had been picked to develop the steel plant in Oman's Sur area. [Representational image]

A planned 2.5 million-tonne per annum steel plant in Sur has been put on hold in light of reduced oil and commodity prices.

Initial plans for the project included the use of direct reduction iron (DRI) and scrap metals for the facility to manufacture special steel and rebars to be used within Oman and exported. 

Industrial land set aside for the factory has reportedly been returned to the Public Establishment for Industrial Estate. 

Sun Metals was appointed to build the factory, with its India-based promoter group set to take 30% equity in the $400m (OMR154m) development. 

Remaining equity would have been offered to local investors.

Officials said the dip in global steel prices has also contributed to the project's suspension. 

P T Sivarajan, director of operations at Sun Metals, said: "[The plant] is not taking off now because of the recession.

"People are not investing in steel. 

"We are waiting for an opportune time and expecting the economy to recover and come back to normalcy," he added, according to Times of Oman.

Sivarajan said that an earlier agreement with Korea-based Posco Engineering and Construction for planning, engineering, procurement, construction, operation, and maintenance works on the project has been suspended.

Another agreement, which was signed with Japan's Sojitz Corporation for support of in-take, off-take, and co-development has also been scrapped.

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May 11, 2019