Emirates Steel signs Swedish deal

ESI is adding to iron ore supply as steel production grows

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Emirates Steel has signed a purchase agreement for iron-ore pellets with Sweden's LKAB to secure additional quantities of ore as the company increases production.

"The new agreement will strengthen our supply in support of our future growth plans," said Saeed Ghumran Al Romaithi, Emirates Steel's chief executive.

The Abu Dhabi-owned steel maker this year reached a production capacity of 3.5 million tonnes per annum, and requires around 4.8 million tonnes of iron-ore pellets every year.

The company aims to expand capacity further to 5.5 million tonnes. It sources its iron ore through long-term agreements from suppliers that now include LKAB. Experts predict the price of iron ore to tumble from around US$130 (Dh447.4) to $80-$90 a tonne by 2015 as steel demand from China slackens, and iron ore mining expands.

Emirates Steel did not reveal the length of the contract with LKAB.