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Aramco, PIF and Chinese firm to build Saudi steel plant

2 May 2023

Saudi Aramco has signed a joint-venture agreement with the kingdom’s sovereign wealth institution, the Public Investment Fund (PIF), and Chinese steel manufacturing conglomerate Baoshan Iron & Steel Company (Baosteel) to establish an integrated steel plate manufacturing complex in Saudi Arabia.

The steel plate-producing complex will be located in Ras al-Khair Industrial City in Saudi Arabia’s Eastern Province, Aramco said in a statement on 1 May.

Ras al-Khair was recently designated as one of the four new Special Economic Zones announced by Saudi Crown Prince Mohammed bin Salman.

The facility is expected to have a production capacity of up to 1.5 million tonnes a year. It will mainly cater to industrial sectors such as pipelines, shipbuilding, rig manufacturing, offshore platform fabrication, and tank and pressure vessel manufacturing, as well as the construction, renewables and marine sectors.

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.

The DRI plant will be compatible with hydrogen without major equipment modifications, potentially reducing CO2 emissions by up to 90 per cent in the future, Aramco claimed.

“The complex would be the first facility of its kind in the kingdom and the GCC region, advancing the regional steel industry ecosystem,” the statement said.

“The project aims to enhance the domestic manufacturing sector through localising the production of heavy steel plates, transferring knowledge and creating export opportunities,” it added.

The steel plate complex will receive support from the Saudi government’s Shareek incentives programme for large companies, and also falls under Aramco’s Namaat local industrial investments programme.

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Indrajit Sen

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