Ground broken for first MIDREX® Direct Reduction Plant in Oman;Kobe Steel to construct first HOTLINK® delivery system

June 08, 2006

On Saturday May 27th, SHADEED Iron & Steel LLC held its official groundbreaking ceremony for the world’s first HOTLINK® Plant and also the first MIDREX Direct Reduction Plant to be built in Oman. In attendance were members of Kobe Steel, Ltd., Midrex Technologies Inc., Al-Ghaith Holdings (SHADEED’s parent company) and various dignitaries and invited guests.

The SHADEED project, originally announced in May 2005, has undergone considerable scope changes.  Kobe Steel will construct a MIDREX® Direct Reduction Plant using HOTLINK to discharge Hot DRI to an adjacent EAF at 700 Celsius, but now with a more than doubled production capacity of 1.5 million metric tons per year.  Originally, the MIDREX HOTLINK Plant was announced to have a 5.5 meter diameter shaft furnace to produce 720,000 tons/year of Hot DRI.

SHADEED Iron & Steel LLC awarded Kobe Steel and its local construction unit,  Kobe Steel Sohar Project Construction & Company LLC, the contract valued at US$220 million. 

Kobe Steel will be responsible for the design and equipment supply, and Kobe Steel Sohar for the construction and commissioning of the direct reduction (DR) plant. Midrex Technologies Inc., a Kobe Steel Group company will provide equipment engineering and services for the project. Operations are forecast to start in October 2008. 

Project details

The SHADEED plant will use the MIDREX® Direct Reduction Process, in which natural gas is used to "reduce" iron pellets into direct reduced iron (DRI), by increasing their metallized iron content to over 90%.  DRI is often used as a supplement to or substitute for high-quality scrap in electric steelmaking.  Developed by Midrex Technologies, Inc., the MIDREX® Process is used to produce 63% of the world's DRI.

The plant will also use Midrex's HOTLINK® system to discharge hot DRI directly into the electric arc furnace – the first commercial application of this system in the world.  In the usual operation of a direct reduction plant, the DRI is cooled, stored and used as necessary in the electric furnace.  HOTLINK maintains 100% sealing between the DR plant and the electric arc furnace.  Gravity is used to reliably deliver high temperature DRI to the EAF located directly below.

HOTLINK will enable a 25% reduction of the electricity consumed by the electric furnace.  Electrode consumption in the electric furnace is also reduced by 25%. For more than two decades the steel industry and DRI technology suppliers have sought ways to best utilize the sensible heat of freshly produced DRI.  HOTLINK is an innovative step forward in energy conservation and increased meltshop productivity.  Excess Hot DRI, when not consumed by the meltshop will be used to produce hot briquetted iron (HBI).

SHADEED's direct reduction plant will be located in a new industrial complex at Sohar Industrial Port, approximately 220 kilometers northwest of Oman’s capital city of Muscat.  Other suppliers are currently holding talks with SHADEED to provide the melt shop, consisting of an electric arc furnace and continuous caster, and the materials handling system.  Including port facilities, the entire project is estimated to cost US$700 million. 

Al-Ghaith Holdings, SHADEED's parent company is a well-established group in the United Arab Emirates and will provide equity and financing for the MIDREX Plant.  Based in Abu Dhabi, Al-Ghaith Holdings is a diversified enterprise involved in oil development, construction, engineering and real estate.  SHADEED is Al-Ghaith's first venture in the steel business.

Over the past two years, demand has grown for larger MIDREX Direct Reduction Modules with capacities of over 1 million metric tons per year.  In 2004, HADEED (Saudi Iron & Steel Company) in Saudi Arabia ordered a 1.76-million-metric-ton-per-year DR Plant.  Last year, Midrex clinched an order with Lion Diversified Holdings Bhd in Malaysia to supply equipment and technology for a 1.54-million-metric-ton-per-year MIDREX Plant, and Gazmetall's Lebedinsky GOK of Russia signed a contract for a MIDREX Plant with a capacity of 1.4 million metric tons per year.  Also in 2005, Qatar Steel Company awarded Kobe Steel a contract for a 1.5-million-metric-tpy DR plant.  Earlier this month, the Al-Tuwairqi Group in Saudi Arabia announced that it would build a 1.28 million metric ton per year MIDREX Plant in Pakistan.





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