São Paulo – The Brazilian mining company Vale has closed a deal to supply 3.3 million tonnes of pellets per year to the Saudi Basic Industries Corporation (Sabic). The agreement was signed and announced by Vale last Tuesday (6th). According to the Brazilian company, this is a new contract signed with Sabic, a company whose relations with Vale go back a long time, as far as 1982. The contract that was signed is a long-term one, and the supply will take place over a ten-year period.
The pellets that will be exported are of the direct reduction variety, to be used in electric furnace steel mills. The contract was signed by the vice president for Metals at Sabic, Abdulaziz Sulaiman Al-Humaid, and the executive director of Ferrous Products at Vale, José Carlos Martins. Al-Humaid is also the chairman of the board of Hadeed, a subsidiary of Sabic’s that makes iron and steel. “This contract is in line with the desire of Vale and of the Saudi Basic Industries Corporation to strengthen their relations even further,” says the release issued by Vale.
Sabic is the Gulf’s leading petrochemical company and one of the world’s largest in the chemicals, fertilisers, plastic and metal industries. The Saudi company has operations in the Brazilian plastic industry, as a result of having purchased GE Plastics, based in the interior of the state of São Paulo, approximately two years ago. Sabic is the largest state-owned Saudi company and operates in the Middle East, Africa, the Americas, Europe and Asia.
The Saudi company posted net profit of 1.8 billion Saudi rials in the second quarter this year, a figure equivalent to roughly US$ 480 million. There was a 76% decline over the same period last year, but the figure is higher than the one recorded in the first half this year, when Sabic posted a loss. Revenues also dropped significantly during the period, with a 66% reduction, equivalent to 4.1 billion Saudi rials (US$ 1.09 billion), in comparison with the second quarter of 2008.
Vale is also involved in a series of deals in the Arab world. The company participates in a project for an iron ore pellet manufacturing plant in Oman, with forecasted investment of US$ 1 billion, that should start operating next year, as announced when the deal was launched. The Brazilian company also signed a partnership deal this year with Dubal, the aluminium manufacturer of the United Arab Emirates. Dubal has become a partner with a 19% stake in Vale’s project for building an alumina refinery in the municipality of Barbacena, in the state of Pará.
*Translated by Gabriel Pomerancblum