Duqm, a coastal town in Al Wusta Governorate in the Sultanate of Oman, is becoming a global hub for direct-reduced iron (DRI) production, attracting investments from steel industry players around the world. The development of DRI plants within the Special Economic Zone at Duqm (SEZAD) is set to transform Oman into a major steel exporter, providing a significant boost to the country's economy.
DRI is a high-quality iron ore product that is used to make steel. It is produced by reducing iron ore with natural gas in a process called direct reduction. DRI is a cleaner and more efficient alternative to traditional blast furnace steelmaking, as it emits fewer greenhouse gases and consumes less energy.
The Sultanate of Oman, with its abundant natural gas reserves and strategic location, is an ideal location for DRI production. Duqm, in particular, is attractive to investors due to its deep-water port, which allows for easy export of the finished product to markets around the world. It also has access to a reliable supply of natural gas, which is a key raw material for DRI production.
Several major players in the steel industry have already announced plans to invest in DRI production in Duqm. Just recently, Mitsui & Co, Ltd and Kobe Steel, Ltd announced the formation of a joint venture to build and operate a 5 MTPA DRI plant in Duqm through MIDREX process. The production plant will be powered by natural gas and is scheduled to commence production in late 2027.
The Mitsui-Kobe Steel joint venture is well-suited to compete in the global DRI market due to its expertise in steel production and its extensive network of customers. The joint venture will be able to leverage the strengths of both companies to produce high-quality DRI at a competitive cost.
On the other hand, Oman-based Jindal Steel and Power Limited (JSPL) intends to set up a 4.5 million tonnes per annum (MTPA) capacity integrated steel mill for the production of a range of green steel products at a capex of around $2.4 billion. Anchored by a 6 MTPA pelletising plant, the mega project will be integrated with a 2.25 MTPA direct reduced iron (DRI) plant and 2.5 MTPA Electric Arc Furnace steel melt shop in the first phase (with similar expansions envisioned in the next phase).
Meanwhile, Australia's Fortescue Metals Group plans to study the feasibility of building a green hydrogen-based DRI plant in Duqm. The plant, which would produce 250,000 tonnes of DRI per year, would be powered by renewable energy sources, such as solar and wind power.
The development of DRI production in Duqm is part of Oman's broader strategy to diversify its economy and create new opportunities for growth. The Omani government has identified manufacturing sector as a key area for development and DRI production in Duqm is expected to play a significant role in achieving this goal.
Overall, the DRI production in Duqm is a significant development that has the potential to transform Oman into a major player in the global steel industry. The investment from global players such as Mitsui-Kobe Steel joint venture, JSPL and Fortescue Metals Group is a testament to the Duqm’s attractive business environment and strategic location. As the DRI market continues to grow, Duqm is well-positioned to benefit from this trend and become a key hub for DRI production in the region.
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