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Vale has delivered its first shipment of pellets to Saudi Basic Industries Corporation (SABIC) from its US$1.35 billion Palletising Plant and Distribution Centre in Sohar.

The 77,000 tonnes shipment is part of a recently signed contract to supply 34 million tonnes of pellets to SABIC.

Vale started pellet production at a capacity of 4.5 million metric tonnes per year earlier in April 2011 which officially marked the start-up of its first line of operations. The two-unit Pelletizing Plant will be fully operational by November 2011, producing a total of 9 million metric tonnes of iron-ore pellets annually.

Vale and SABIC have been business partners since the start up of the SABIC-Hadeed plant in Al Jubail in 1982.

Sergio Espeschit, Vale Sales General Manager said, "We have managed to substantially reduce the time taken for a shipment to reach SABIC's plant in the Kingdom of Saudi Arabia from 35 days to 2 days thereby arming Vale and its clients with an even greater competitive edge."

Steel production has increased by more than five folds to a current level of 5.2mn tonnes and is expected to shortly reach 6mn tonnes.

Abdulaziz Sulaiman al Humaid, SABIC Executive Vice-President for Metals and Hadeed Chairman of the Board stated, "With the plant strategically located in Sohar, which is a few sailing days and Vale's vast investments, we are confident that we will increase our competitiveness, becoming regional leaders in the steel industry."

"The recently signed contract is but a first step towards accomplishing our best laid strategies as the accessibility of Vale's operations in Oman provides us with the means to further expand our output capacity, enhance cost efficiency and reduce dependency on our lighterage operations."