The Sohar Industrial Port Company SAOC has signed a Sub Usufruct Agreement, which is equivalent to a land lease agreement, with the Companhia Vale do Rio Doce. It was signed at Rotterdam by Mr Maqbool bin Ali Sultan minister of commerce & industry of Oman and chairman of SIPC, Mr Eduardo Bartolomeo ED logistics of VALE and Mr Sergio Leite country manager for Oman of VALE.
The agreement, subject to VALE’s board approval, facilitates approximately USD 1 billion worth of investments in a production facility and distribution centre in the Port of Sohar.
VALE is planning to construct an iron ore pellet plant and iron ore distribution centre facility in the Port of Sohar. The production at the Port of Sohar of iron ore pellets is planned to commence in the second half of 2010.
In addition there will be joint investment in related marine infrastructure by the Government of the Sultanate of Oman and the Port of Rotterdam.
The management of the Port of Sohar, SIPC, is planning to start the construction of a deepwater jetty this year to accommodate the very large vessels with drafts of up to 23 meters, bringing the iron ore from Brazil. The Port of Sohar is also aiming to establish a more extensive handling of bulk cargo facilities and the signing today with VALE gives the Port of Sohar the opportunity to enter the next phase in its expansion.
The strategic location outside the Strait of Hormuz and near emerging markets combined with the fact that Oman is a country with a good environment to develop business are the main reasons for VALE to choose the Port of Sohar for its expansion in the Middle East. The Port of Sohar also has access to deep water and the investment of VALE can further boost the development of the bulk and steel cluster in the port, next to the petrochemical and logistical cluster.
This will be the first whole owned green field investment in the ferrous sector outside Brazil for VALE. The distribution centre within the Port of Sohar will allow VALE an easier path for distribution to the Middle East region.