China’s foremost steel producer, Baoshan Iron and Steel (Baosteel), has declared an uptick in its financial commitment to a Saudi Arabian joint venture focused on flat products manufacturing. The investment will surge to $1 billion, a considerable increase from the initial $437.5 million.
The strategic partnership was solidified in May through an agreement between Baosteel, a branch of the larger Baowu Steel Group, and its partners, Saudi Aramco and the Saudi Public Investment Fund (PIF). Ownership is evenly split, with Baosteel holding a 50% interest and the remaining stakes of 25% each belonging to Saudi Aramco and PIF, mirroring the original equity distribution established last year.
Furthermore, Baosteel has made a decision to scale down the main collateral for the venture’s funding to nearly $1.1 billion from the previous $1.3 billion, as revealed in a document submitted to the Shanghai Stock Exchange.
The anticipated output for the new plant, situated in the Ras al-Khair industrial zone, includes 2.5 million tons of direct reduced iron and 1.5 million tons of flat steel products annually. These materials will primarily serve the oil, shipbuilding, and construction sectors across the Middle East and North Africa.
Saudi Arabia, according to industry reports, is actively courting overseas investments across a broad spectrum of sectors including renewable energy and metallurgy. Concurrently, China is pursuing strengthened economic connections with Persian Gulf nations, while its steel manufacturers are looking to expand their export footprint in light of diminishing domestic demands.
In a related development, the Essar Group from India has pledged a $4 billion investment towards the establishment of an eco-friendly steel production facility in Saudi Arabia, with plans to initiate the project for a 4 million tonne per annum steel plant in Ras Al Khair in 2024, pending final approvals expected earlier this year.
