EOL to double tonnage of ore to Musaffah

Eships Oldendorff of Abu Dhabi will double their supply of iron to Emirates Steel as part of expansion.

Four days every month, Eships Oldendorff (EOL) of Abu Dhabi shifts a mountain of iron ore, barge by barge, from massive ships far out at sea to the Emirates Steel plant in Musaffah. Those volumes will now double after the firm was chosen yesterday to supply the steel mill's expansion project, which will come online by the end of 2011. EOL, which is owned in part by the Government, will now deliver 4.8 million tonnes of iron ore to Emirates Steel every year.

"This is a major step for EOL," said Ziad Qushair, the general manager. "It's the reason that EOL was set up." Emirates Steel signed the final piece of its second-stage expansion project on Monday, when it confirmed that Danieli, an Italian company, would build its new steel mill at a cost of Dh1.74 billion (US$474 million). The expansion will boost the firm's output of steel to 3 million tonnes per year, from 2 million tonnes today.

Mr Qushair declined to specify the value of the shipping contract. EOL is a private firm owned jointly by Emirates Ship Investment Company (Eships) and Oldendorff Carriers, a German firm. Eships, in turn, is a joint venture of Mubadala Development and Abu Dhabi Investment Company. EOL serves as the marine link between huge iron ore carriers from Canada and Brazil, which are too large to enter Musaffah channel, and Emirates Steel. "The reason for this whole thing is that the Musaffah channel only has six metres of depth," Mr Qushair said. "These are considered some of the largest dry bulk vessels around."

The company's fleet meets the carriers 40km offshore, where a ship equipped with three cranes transfers buckets of iron from the large carriers on to shallow-draft barges, which pull right up to the steel complex. The key to the business is to unload the large carriers as quickly as possible to minimise shipping charges, Mr Qushair said. Mubadala has said Eships, EOL's parent company, is an investment priority because it supports the growth of Abu Dhabi's transport and logistics industries. Eships has also signed long-term contracts with Louis Dreyfus, Aluminium Bahrain and oil and gas companies including Statoil and Total.