Meed | Aramco steps in to boost Saudi steel potential

Aramco steps in to boost Saudi steel potential

10 May 2023

As the main engine facilitating Saudi Arabia’s Vision 2030 socio-economic transformation, Saudi Aramco is working to ensure its localisation initiatives meaningfully contribute to the programme.

The company is intensifying its localisation efforts by cultivating an in-kingdom supply chain to not only meet its business requirements, but also create specialised jobs for Saudi nationals.

Local manufacturing is a major element of this strategy, and Aramco has made key investments in the production of steel products – a vital business requirement – as part of its commitment.

SeAH Gulf Special Steel Industries (GSI), a joint venture (JV) in which Aramco is a stakeholder, began constructing a facility in February that will mainly produce steel pipes. The estimated $240m factory is located in the King Salman Energy Park (Spark) industrial facility. When it enters operation in 2025, it will have the capacity to produce 20,000 tonnes a year (t/y) of stainless steel seamless pipes and tubes.

On 1 May, Aramco entered into another JV to establish an integrated steel plate manufacturing complex in Saudi Arabia, which will help “increase localisation of the steel value chain”, according to Fahad M al-Abdul Kareem, senior vice-president of Industrial Services at Aramco.

Ras al-Khair steel complex

Aside from Aramco, the JV that will build the steel-plate production complex includes the kingdom’s sovereign wealth institution, the Public Investment Fund (PIF), and the Chinese steel manufacturing conglomerate Baoshan Iron & Steel Company (Baosteel).

The complex, deemed the first of its kind in Saudi Arabia, will be located in Ras al-Khair in the kingdom’s Eastern Province, which was recently designated as one of four new Special Economic Zones by Saudi Crown Prince Mohammed bin Salman.

The planned facility will have an output capacity of 1.5 million t/y and “serve strategic industrial sectors including pipelines, offshore platforms, rigs, tanks, pressure vessels, shipbuilding and others”, Al-Abdul Kareem tells MEED.

“The complex will bring together Aramco’s unrivalled energy and industrial services ecosystem, Baosteel’s advanced steel plate industry capability and PIF’s investment expertise,” he says.

Engineering, procurement and construction work on the project has been divided into several packages, which will be tendered soon, with a contract award expected by the second half of this year.

The steel complex will be able to start operating with hydrogen fuel without major equipment modifications as soon as the new hydrogen technology is ready
Fahad M al-Abdul Kareem, Aramco

Environmental impact

“This complex aims to be one of the lowest-carbon emissions, large-scale steel plate manufacturing facilities in the world based on currently announced projects,” says Al-Abdul Kareem.

Aramco signed a memorandum of understanding with Baosteel to conduct an engineering and feasibility study for the proposed steel plate complex in September 2021.

The plant will be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace to reduce carbon dioxide (CO2) emissions from the steel-making process by up to 60 per cent compared with a traditional blast furnace, Aramco announced recently.

“The steel complex has also been designed to be hydrogen-compatible as a substitution for natural gas,” Al-Abdul Kareem adds. “It will therefore be able to start operating with hydrogen fuel without major equipment modifications as soon as the new hydrogen technology is ready for application.”

“This would enable the complex to make steel with up to 90 per cent less CO2 emissions than traditional coal-based steel production processes,” he explains.

Economic contributions

The steel plate factory’s workforce is expected to comprise 80 per cent Saudi nationals to meet Aramco’s Saudisation goals, he says. It is also projected to contribute $1.7bn to Saudi Arabia’s GDP every year.

The JV aims to export 30 per cent of its capacity to Middle East and North Africa (Mena) markets. “Through this plant, the kingdom is expected to be able to substitute imports by amounts close to SR4.9bn, or $1.3bn, annually,” says Al-Abdul Kareem.

To maximise its economic potential, the proposed complex will receive support from the Saudi government’s Shareek incentives programme for large companies. It has also been brought under Aramco’s Namaat local industrial investments programme.

“This project has the potential to create a tangible impact on the kingdom’s economy and contribute to Saudi Arabia’s GDP growth, generate new jobs, support the [In-Kingdom Total Value Add] iktva programme targets by adding to the local content production and lead to considerable import substitution,” the Aramco executive concludes.

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Indrajit Sen

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The new packages add detail to Jedco’s wider expansion plans disclosed in 2023, when it was reported that the company would invest SR115bn ($31bn) to increase KAIA’s capacity to 114 million passengers a year, with an overall completion target of 2031.

Jedco has recently awarded several significant contracts linked to the airport’s upgrade programme.

In November 2024, a joint venture of local Algihaz Contracting and Turkey’s TAV was awarded a contract to rehabilitate the South Terminal to serve Umrah and Hajj pilgrims, with Singapore’s Surbana Jurong acting as consultant.

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The contract duration is three years, with delivery targeted for late 2029.

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READ THE SEPTEMBER 2026 MEED BUSINESS REVIEW – click here to view PDF

Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:

> AGENDA: Gulf nuclear revival takes shape

> MARKET FOCUS: Kuwait keeps dealmaking alive under fire

> INDUSTRY REPORT: Gas processing takes centre stage in Mena region

> INTERVIEW: Emsteel persists with business productivity and efficiency

> TUNNELS: The Gulf’s next construction boom is happening underground

To see previous issues of MEED Business Review, please click here

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The first phase of the development will cover about 120,000 square metres (sq m).

Thumrait Industrial City is located in Oman’s Dhofar Governorate and spans an area of more than four million sq m.

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In March, Madayn said it is preparing to invest more than RO245m ($637m) to upgrade and expand infrastructure across its industrial cities between 2026 and 2030, as part of efforts to attract new investment and advance economic diversification.

According to media reports, Madayn chief executive Dawood Bin Salim Al-Hadabi said the programme is part of an expanded, phased plan aligned with Oman Vision 2040 and the authority’s long-term Madayn 2040 strategy.

The objective is to deepen Oman’s industrial base and spread growth across the sultanate’s governorates.

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- Sinopec International Petroleum Service Corporation (China)
- Karamay Jianye Energy (China)
- Modern Drilling Company (Egypt)
- Grey Wolf Drilling International (US)
An earlier list, which was published on 11 February, included 51 qualified companies.

The reduction in qualified drilling contractors follows KOC’s notice on 27 April this year, informing existing qualified contractors that they would need to reapply.
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Wil Crisp

Abu Dhabi expects 45% emissions cut as electricity demand rises

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Abu Dhabi-based Emirates Water & Electricity Company (Ewec) expects carbon emissions from power and water production to fall by more than 45% by 2035 as the UAE expands renewable energy and reverse osmosis (RO) desalination.

The state offtaker's latest long-term system planning forecasts emissions will decline from about 42 million tonnes in 2019 to approximately 23 million tonnes in 2035.

The reduction is expected despite annual electricity demand that is forecast to rise by about 70% in 2026-33.

Ewec said the expansion of renewable energy and the shift towards RO desalination will be the principal drivers of the reduction.

The company plans to increase Abu Dhabi's solar capacity to 14GW by 2030 and more than 35GW by 2035. This will be supported by up to 15GW of battery storage capacity.

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It also comprises the 1GW Al-Dhafra open-cycle gas turbine power plant, the 2.5GW Taweelah C combined-cycle gas turbine (CCGT) plant and a separate 400MW bess IPP.

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