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Oman's Jindal Shadeed Group will invest more than $3 billion to set up a green steel plant in a special economic zone in the southern port city of Duqm.
The company has the necessary approvals to secure the land for a green hydrogen-ready steel project, which can process 5 million tonnes of steel a year, it said in a statement on Sunday.
The plant will supply steel products to companies in the automotive, wind energy and consumer durables sectors.
“There is a booming demand for green steel from ESG [environmental, social and governance] conscious customers around the world, especially in Europe and Asia, who have already committed significant reduction in Scope 3 emissions by 2030,” Harssha Shetty, chief executive of Jindal Shadeed Group, said.
Steel makers are investing in decarbonising their operations as more customers commit to net-zero goals.
Hydrogen is expected to account for 12 per cent of global energy use and 10 per cent of carbon emission reductions by 2050, driven by the urgency of climate change and countries’ net-zero commitments, according to the International Renewable Energy Agency.
Hydrogen comes in various forms, including blue, green and grey hydrogen. Blue and grey are derived from natural gas while green is produced using renewable sources.
Oman plans to produce a million tonnes of green hydrogen by 2030 and has set up a state-owned company as part of its plan to achieve net-zero carbon emissions by 2050.
The Gulf country has earmarked two blocks in Duqm and another four blocks in Salalah to be tendered for the development of green hydrogen projects.
Emissions from steel must be reduced by 50 per cent by 2050 and then continue to fall, to meet the world’s climate goals, according to the International Energy Agency.
Coal currently meets about 75 per cent of the energy demand of the sector.
The agreement “reinstates Duqm’s position as a leading and attractive destination for large strategic projects that will benefit from renewable energy and green hydrogen”, said Ahmed Al Dheeb, deputy chairman of the Public Authority for Special Economic Zones and Free Zones.
“The availability of solar energy and wind resources throughout the year will encourage more investments in green industries and renewable energy projects in the Sultanate of Oman in general, and Duqm in particular,” he said.
Jindal Shadeed Group also signed an initial agreement with Saudi Arabia's utility provider Marafiq for water, seawater for cooling purposes, and other services.
Like other Gulf countries, Oman is benefiting from a surge in economic activity tied to higher oil prices. Brent, the benchmark for two thirds of the world’s oil, is currently trading at about $85 a barrel after falling to less than $30 in 2020.
Last month, the sultanate launched a three-year fiscal stability programme to add to the momentum of its economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.
“This green steel project aligns very well with Port of Duqm’s vision to be a green port operating on sustainable and renewable energy sources, in line with the Oman vision 2040 to support economic diversification and reduce reliance on the oil and gas sector,” Reggy Vermeulen, chief executive of Port of Duqm, said.
“This huge project will not only attract foreign investment but also provide work opportunities for local talent.”