Baosteel to increase investment in rolled steel production in Saudi Arabia to $1 billion

The agreement on the creation of a joint venture in the country was signed in May

China’s largest steelmaker, Baoshan Iron and Steel (Baosteel), has announced that it will more than double its investment in a joint venture to produce flat products in Saudi Arabia to $1 billion from about $437.5 million previously. This was reported by Reuters.

Baosteel, a subsidiary of Baowu Steel Group, signed an agreement with Saudi Aramco and the Saudi Public Investment Fund (PIF) in May this year to establish a steel plate joint venture. It owns a 50% stake, while Saudi Aramco and PIF will each receive 25%. The stakes held by the companies are the same as in the original plan announced last year.

The Chinese company will also reduce the principal amount of collateral to finance the joint venture to almost $1.1 billion from $1.3 billion, according to a separate document filed with the Shanghai Stock Exchange.

The projected annual capacity of the plant is 2.5 million tons of direct reduced iron and 1.5 million tons of flat products. The facility, located in the industrial city of Ras al-Khair, will supply products to the oil sector, shipbuilding and construction industries in the Middle East and North Africa.

According to Bloomberg, Saudi Arabia is seeking to attract foreign investment in various industries, from solar energy to metals. At the same time, China is seeking to establish closer economic ties with the Persian Gulf countries. In addition, Chinese steel mills are seeking to increase exports amid falling domestic demand.

As GMK Center reported earlier, the Indian conglomerate Essar Group has confirmed a $4 billion investment in setting up an environmentally friendly steel production facility in Saudi Arabia. The company planned to start work on a 4 million tonne per annum steel plant in Ras Al Khair in 2024. Last year, the Indian conglomerate expected to receive final approvals by June this year.