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Saudi and Chinese firms ink pact for steel plate complex

Aramco, Baosteel and PIF executives at the signing ceremony for the steel plate manufacturing joint venture in Dhahran, Saudi Arabia, on May 1, 2023

Saudi energy and chemicals major Aramco, sovereign Public Investment Fund (PIF) and China’s Baoshan Iron & Steel Co., Ltd. (Baosteel) have signed an agreement to establish an integrated steel plate manufacturing complex in the kingdom.

The joint venture complex is expected to be developed in Ras Al Khair Industrial City, one of the four new special economic zones recently announced by Crown Prince and Prime Minister Mohammed bin Salman.

The proposed facility is forecast to have a steel plate production capacity of up to 1.5 million tons annually. In addition, it will be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace that will reduce CO2 emissions from the steel-making process by up to 60 percent compared to a traditional blast furnace. 

The DRI plant will be compatible with hydrogen without major equipment modifications, helping reduce CO2 emissions by up to 90 percent.

Aramco president and chief executive Amin Nasser said the kingdom’s first steel plate production facility is expected to enhance Saudi Arabia’s steel industry ecosystem and improve supply chain localisation. 

Yazeed Al Humied, deputy governor and head of Mena Investments at PIF, said that the partnership aims at establishing an integrated steel plate manufacturing facility that will strengthen Saudi Arabia’s industrial development and enable its role as a supplier within the metal industry.

Since 2017, PIF has invested in 13 strategic sectors and established 77 new companies domestically.

The cost and funding details were not disclosed.

Saudi Arabia will be the project’s primary target market, with plans to export to the GCC and broader Mena region. The facility is expected to significantly reduce reliance on imported steel in several strategic industrial sectors, including pipelines, shipbuilding, rig manufacturing, offshore platform fabrication and tank and pressure vessel manufacturing. 

The steel plate complex is supported by the kingdom’s “Shareek” program for large companies, which aims to foster greater private-public cooperation through incentives for domestic investment. 

The project also falls under Aramco’s “Namaat” program, which aims to establish strategic partnerships that drive economic, supply chain and industrial investment diversification and expansion.

The agreement is subject to regulatory approvals and closing conditions.