Aramco, Baoshan Iron & Steel Co. (Baosteel), a leading steel conglomerate, 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
The complex is expected to be located in Ras al-Khair Industrial City, one of the four new Special Economic Zones recently announced by His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, Prime Minister and chairman of the Council of Economic and Development Affairs.
The complex would bring together Aramco's energy and industrial services ecosystem, Baosteel's advanced steel plate industry capability and PIF's strong financial capabilities and investment expertise. It is expected to have a steel plate production capacity of up to 1.5mn 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.
Amin H. Nasser, Aramco president & CEO, said, "The Kingdom's first steel plate production facility is expected to enhance Saudi Arabia's steel industry ecosystem and improve supply chain localisation. Under Aramco's flagship industrial investment program, Namaat, and supported by the government's Shareek programme, this joint venture is expected to create jobs and contribute to economic growth and diversification. This joint venture is also an example of bringing together expertise from other sectors. With Baosteel and PIF supporting in capacity building in the Kingdom's industrial sector, Aramco aims to create additional value for our company and our partners."
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.