The deal is expected to close by the end of the first quarter of 2024

The Saudi company Saudi Basic Industries Corp (SABIC) plans to sell the steel division of Saudi Iron and Steel Company (HADEED) for 12.5 billion reals ($3.33 billion). Reuters informs about it.

The company is planned to be sold to the State Investment Fund (PIF). The deal is expected to close by the end of the first quarter of 2024, and the proceeds from the sale will be used to expand the company’s operations in the chemical industry. The final sale price of the assets will be announced closer to the completion of the transaction.

SABIC, one of the world’s largest petrochemical companies, reported a significant drop in net profit in the second quarter of 2023 amid lower average sales prices and weak demand. The company said it would focus on its core business of chemical production, justifying the divestment of the steel division.

SABIC’s steel division HADEED is a major player in the Saudi Arabian steel market. The company is a supplier for key infrastructure projects of the country.

HADEED produced 5.2 million tons of steel in 2022, which is 13% more than in 2021. Sales of the division increased by 18.2% compared to 2021 – up to 5.2 million tons.

As GMK Center reported earlier, in 2022, Saudi Arabia produced 9.1 million tons of steel, which is 3.9% more than in 2021. Thus, the country took 21st place in the global ranking of WorldSteel steel producers.

Also, last September Saudi Arabia announced its intention to implement three steel production projects worth $9.32 billion. The country’s government held negotiations with local and international investors. It was planned that the total production capacity of the new steel enterprises would be about 6.2 million tons.