MUSCAT: A plan to build a 2.5 million-tonne per annum steel plant in Sur has been put on hold, in view of sluggish steel prices in global markets and the economic slowdown caused by the slackness in oil prices. The company’s plan was to use direct reduction iron (DRI) and scrap metals on a certain portion for the manufacturing process to annually produce 2.5 million tonnes of special steel and re-bars for both domestic consumption and exports.
“It is not taking off (now) because of the recession. People are not investing in steel,” said P.T. Sivarajan, director of operations at Sun Metals, which was to build the factory. “We are waiting for an opportune time and expecting the economy to recover and come back to normalcy,” he added. Prices of both scrap metal and steel have fallen. Sivarajan said that the company has already returned the industrial land, which was set aside for building the factory, to the Public Establishment for Industrial Estate (PEIE).
An Indian group, which was the main promoter of Sun Metals, was planning to take 30 per cent equity in the $400 million project and offer the remaining equity to local investors. However, the local investors are now interested in concentrating on their group’s business, rather than investing in this project.
Sivarajan also said that an earlier agreement with Korea-based Posco Engineering and Construction for planning, engineering, procurement, construction, operation and maintenance services has been suspended. Another agreement, which was signed with Sojitz Corporation, Japan, for support of in-take, off-take and co-development, has also been scrapped.
