Saudi oil giant Aramco, Chinese conglomerate Baoshan Iron & Steel Co., Ltd. (Baosteel) and the Public Investment Fund (PIF), have signed a shareholders’ agreement to set up an integrated steel plate manufacturing complex in the kingdom.

The manufacturing complex is expected to be located in Ras al-Khair Industrial City, one of the four new Special Economic Zones recently announced by the Saudi Prince Mohammed bin Salman.

The first facility of its kind in the region, the project aims to enhance the domestic manufacturing sector through localizing the production of heavy steel plates, transferring knowledge and creating export opportunities, an Aramco statement said on Monday, without indicating the partners' levels of financial investment in the project.

Saudi Arabia would be the project’s primary target market, with plans to export to the GCC and broader MENA region.

The facility is expected to have a steel plate production capacity of up to 1.5 million tonnes per year. It would also be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace, which aims to reduce CO2 emissions from the steel-making process by up to 60%, compared to a traditional blast furnace.

The investment aligns with PIF’s strategy to unlock the capabilities of promising sectors and strategically important industries that can drive the diversification of the local economy.

(Reporting by Brinda Darasha; editing by Seban Scaria)