Gulf Investment Corporation (GIC) has acquired 50 per cent shareholding of Brazil's Companhia Vale do Rio Doce in Gulf Industrial Investment Company (GIIC) for about $480 million, making GIC the sole shareholder. GIC's project to build a 6 million-tonne-a-year (t/y) grassroots pelletising plant close to the GIIC facility at Hidd will now be carried out as an expansion.

GIC had always pushed for the project to be an expansion, and the disagreement between the partners is understood to have been a strong factor in the buy-out decision. Economies of scale are likely to bring project costs down by some $120 million to about $230 million.

Technical bids were opened on 7 June from Japan's Kobe Steel, Germany's Siemens and Italy's Danieli for the engineering, procurement and construction (EPC) and equipment supply packages. Commercial bids will be opened on 27 June, after which GIC will draw up a shortlist of two.

A financial adviser is due to be selected imminently. Arab Banking Corporation (ABC), BNP Paribas and HSBC are understood to be the frontrunners. ABC was advising when the project was to be carried out as an independent plant and is also the adviser on the nearby United Stainless Steel Company (Usco) scheme, in which GIC is the main shareholder.

The selected bank will be responsible for the selection of either the UK's Atkins or the US' McLellan & Partners to carry out the final bid evaluation.

GIC's ultimate plan is full integration along the iron and steel value chain. It has received a gas allocation from the government to establish a steel complex close to Usco and GIIC. The plant is likely to include a 1.6 million-t/y direct reduction iron (DRI) unit, a 1.1 million-t/y meltshop and a 1.1 million-t/y rolling mill. Total project costs are estimated at about $500 million.

GIC is planning to establish a holding company for the three projects. It is also planning upstream integration and is in talks with several iron ore producers.