Bahrain’s Gulf Industrial Investment Company (GIIC) will supply more than five million tonnes of direct reduction (DR) grade iron pellet to Qatar Steel Company (Qasco) under a five-year purchase agreement worth QR900 million ($247.2 million).

The agreement stipulates that GIIC supply Qasco 600,000 tonnes of DR pellets in the first year. The DR pellets supply is to be gradually increased during the five-year period to 840,000 tonnes in 2006 and eventually to 1.5 million tonnes in 2007 - 2008.
Qasco general manager Shaikh Nasser bin Hamad Al Thani said the purchased iron ore pellets would be reduced using gas process to iron and later melted to produce billets and reinforced steel bars as end products. He said Qasco required one million tonnes of iron ore for its production and the quantity purchased from GIIC covered 60 per cent of its requirements, the remainder coming from other markets.
This is the first time Qasco is signing a major five-year contract. Shaikh Nasser said his company departed from its customary one-year contracts with GIIC so that it could match Qasco requirements for the coming years and add to co-ordination and understanding between the two producers.
 “It is very healthy for Gulf countries to have complementary industries. Bahrain produces iron pellets and we produce steel and this makes the whole economy of the Gulf much stronger,” he said.
Shaikh Nasser also pointed out that in its current expansion phase Qasco would increase its production capacity to 1.5 million tonnes of DR iron ore and 500,000 tonnes of molten steel and eventually  increase steel production to four million tonnes by the year 2010-2012.
Chequer H Bou-Habib, CEO, GIIC, noted that GIIC utilised advanced technology to produce the best quality pellets from iron ore that was entirely exported, 50 per cent of the output going to the Gulf region and the rest to India and East Asian countries. “In the Gulf, our major customer quantity-wise and in market share is Qasco. We are responsible for 60 per cent of Qasco consumption,’ he said.
The GIIC official said his company had been a major supplier of iron pellets for Qasco for a long time and that it was committed to catering to its growing requirements. GIIC was one of the leading manufacturers of Direct Reduction (DR) grade oxide pellets and the only oxide pellet manufacturer in the Gulf region.
Bou-Habib also said the GIIC plant with an annual production capacity of four million tonnes was in the process of increasing its capacity by 10 to 15 per cent within two years.