Aramco, Baoshan Iron and Steel and the Public Investment Fund (PIF) have signed a shareholders' agreement to establish an integrated steel plate manufacturing complex in the Kingdom of Saudi Arabia.
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Subject to customary regulatory approvals and closing conditions, the joint venture complex is expected to be located in Ras al-Khair Industrial City.
The complex would bring together Aramco's unrivaled energy and industrial services ecosystem, Baosteel's advanced steel plate industry capability and PIF's strong financial capabilities and investment expertise.
It would be the first facility of its kind in the Kingdom and the GCC region, advancing the regional steel industry ecosystem.
The project aims to enhance the domestic manufacturing sector through localizing the production of heavy steel plates, transferring knowledge and creating export opportunities.
The facility is expected to have a steel plate production capacity of up to 1.5 million tons per year.
It would also be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace, which aims to reduce CO2 emissions from the steel-making process by up to 60% compared to a traditional blast furnace.
The DRI plant would be compatible with hydrogen without the need for major equipment modifications, potentially reducing CO2 emissions by up to 90% in the future.
Saudi Arabia would be the project's primary target market, with plans to export to the GCC and broader MENA region.
It is expected to create new jobs and significantly reduce reliance on imported steel, serving customers in several strategic industrial sectors including pipelines, shipbuilding, rig manufacturing, offshore platform fabrication and tank and pressure vessel manufacturing.
It also would aim to serve the construction, renewables and marine sectors.
The investment aligns with PIF's strategy to unlock the capabilities of promising sectors and strategically important industries that can drive the diversification of the local economy.
It will support a number of PIF's priority sectors that require steel plate and create a more resilient steel industry in the region.
The steel plate complex is supported by the Kingdom's Shareek program for large companies, which aims to foster greater private-public cooperation, create jobs and enhance the development of the Saudi economy by providing incentives for domestic investment.
It also falls under Aramco's Namaat program, which aims to establish strategic partnerships that drive Saudi Arabia's economic, supply chain and industrial investment diversification and expansion. ■