Saudi Aramco, the Public Investment Fund (PIF) and China’s Baoshan Iron & Steel Co., (Baosteel) have signed an agreement to establish an integrated steel plate manufacturing complex in Saudi Arabia.

The joint venture complex will likely come up in Ras Al-Khair Industrial City, one of the four new special economic zones recently launched by Crown Prince Mohammed bin Salman, the companies said in a joint statement.

The facility is expected to have a steel plate production capacity of up to 1.5 million tons per year. It will 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 percent compared to a traditional blast furnace.

Furthermore, the DRI plant will be compatible with hydrogen without requiring major equipment modifications, potentially reducing CO2 emissions by up to 90 percent in the future.

The statement said the project is subject to customary regulatory approvals and closing conditions without disclosing cost and construction timelines.

Amin H. Nasser, Aramco President & CEO, said that the Kingdom’s first steel plate production facility is expected to enhance Saudi Arabia’s steel industry ecosystem and improve supply chain localisation.

The project is supported by Kingdom’s Shareek programme for large companies and Aramco’s Namaat program, which aims to establish strategic partnerships that drive Saudi Arabia’s economic, supply chain and industrial investment diversification and expansion, the statement noted.

(Writing by D Madhura; Editing by Anoop Menon)

(anoop.menon@lseg.com)