MUSCAT: In yet another major triumph for Oman’s emerging green steel industry, German automaker Volkswagen has committed to procuring part of its requirement of low-carbon automotive-grade steel from a landmark green steel project currently under construction at the Special Economic Zone in Duqm (SEZAD).
In a statement, Volkswagen AG said it has signed a Memorandum of Understanding (MoU) with Oman’s Vulcan Green Steel, which is developing a 5 million tonnes per annum (mtpa) capacity hydrogen-ready, low-carbon steel plant at Duqm. Total investment in the Duqm venture, backed by Indian power and steel conglomerate Jindal Group, is around $3 billion.
Announcing the partnership, Dirk Große-Loheide, Member of the Board of Management of the Volkswagen Brand responsible for Procurement and Member of Volkswagen AG’s Extended Executive Committee, said: “Decarbonizing supply chains is a decisive factor for the Volkswagen Group on the road to carbon neutrality. We want to achieve this goal by 2050 at the latest, and using low-carbon steel is an important step in this direction. Green steel will help us make supply chains at Volkswagen even more environmentally friendly going forward.” The announcement comes on the heels of a similar deal reached by another European based steelmaker committing to offtake sizable quantities of low-carbon steel from Vulcan Green Steel.
Czech-based Vitkovice Steel revealed last week that it had signed an agreement to procure around 1 million tonnes of low-carbon steel from the Duqm plant to supply the European market with “quality sheets, sheet plates and billets from ecological steel”.
In opting for Omani green steel for its requirements, Volkswagen cited Vulcan Green Steel’s commitment to producing automotive grades and other high-strength steels at the Duqm complex. Natural gas will be used in the Duqm operations during the initial years and later the operations will be switched over to green energy in a move that will cut carbon emissions by 70% once the transition is complete, the global automotive giant stated.
Significantly, up to 300,000 tonnes of Europe’s annual steel requirements will be covered by the partnership with Vulcan Green Steel, said Volkswagen. “The volumes of low-carbon steel that Volkswagen AG expects to order will cover a significant proportion of total steel requirements and will be used by the Group’s production facilities from 2027 onwards,” it noted.
The German automaker also referenced Vulcan Green Steel’s commitment to developing a fully vertically integrated project for the production of flat steel in Oman that will extend from mined iron ore to own generation of green energy and production of green hydrogen all the way to secondary metallurgy of the finished steel.
Last November, Vulcan Green Steel broke ground on an integrated steel mill featuring two production lines of 2.5 million metric tonnes per year each, comprising direct reduction iron (DRI), an electric arc furnace (EAF) and a hot strip mill. The project will initially be powered by natural gas but later transition to green hydrogen to produce low carbon steel suited for the automobile, wind turbine and consumer durable goods manufacturing industries. First production of green steel is slated during 2027.
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