Aramco, Baosteel, PIF sign agreement to build first steel plate complex in Saudi Arabia

The shareholders agreement signing ceremony

Saudi Aramco, one of the world’s leading integrated energy and chemicals companies, Baoshan Iron & Steel Co., Ltd. (Baosteel) and the Public Investment Fund (PIF) signed a shareholders’ agreement to establish an integrated steel plate manufacturing complex in Saudi Arabia.

The joint venture (JV) complex is expected to be located in Ras Al-Khair Industrial City, subject to customary regulatory approvals and closing conditions, Saudi Aramco said in an emailed joint statement to Argaam.

The complex 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 new complex will be a key addition and a new industry pillar in the Kingdom, Amin Nasser, Aramco President & CEO, said.

Steel plates are considered strategic products that are used as a main component in various industries, such as pipelines, tanks, commercial or military marine industries and ship construction.

These materials are imported, but the new facility aims to fulfill the needs of the Kingdom and region. It also seeks to export this strategic product.

The project is expected to enhance Saudi Arabia’s steel industry ecosystem and improve supply chain localization. It is also expected to create jobs and contribute to economic growth and diversification, Nasser added.

The project’s products are expected to replace the annual imports estimated at more than $1.3 billion (SAR 4.9 billion) when the plant operates at full capacity. The Plant will add about 1,800 direct and indirect jobs with 80% Saudization rate, he concluded.