Baosteel, partners raise investment in Saudi plate JV
Chinese and Saudi Arabian investors are set to increase capital injection into the integrated plate mill joint venture (JV) located in the Ras al-Khair Industrial City special economic zone on Saudi Arabia's east coast, Kallanish notes.
Baosteel will increase its investment to $1 billion, securing a 50% stake in the joint venture, the firm said in a stock exchange filing on Friday. The remaining shareholders, Saudi petrochemical giant Aramco and Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), will each invest $500 million, to each hold a 25% stake in the JV.
This marks a significant increase from the shareholders' initial plan. In 2023, Baosteel announced that its 50% share in the JV would involve an investment of $437.5 million. Aramco and PIF meanwhile said they would each invest SAR 820.31m ($218m) for their 25% shares.
The capital increase plan was approved by Baosteel's shareholders on 26 July. Baosteel's listed company will thus provide a financing guarantee of up to $1.067 billion for the project, with the Saudi Industrial Development Fund (SIDF), the Export-Import Bank of China, or other financial institutions as beneficiaries. The financing will primarily cover project construction costs, ensuring the project's smooth progression.
The joint venture, named BAP Al-Khair Steel Company, has a registered capital of $2 billion. Upon completion, the facility is expected to have a capacity of 2.5 million tonnes/year of direct reduced iron, 1.667m t/y of slab, and 1.5m t/y of thick plate. Plate will be supplied mainly to the oil and gas, shipbuilding, offshore engineering, and construction industries in the Middle East and North Africa.
Baosteel highlighted that this project will be the first green and low-carbon full-process thick plate plant globally. The facility will feature a natural gas-based DRI plant and an electric arc furnace, aiming to reduce CO2 emissions during production. The DRI plant will be compatible with hydrogen without requiring significant equipment modifications, potentially reducing CO2 emissions by up to 90% in the future.
However, the project still requires approval, filing, and registration from relevant regulatory agencies, Kallanish learns. The related guarantees will take effect once the project is officially underway.
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Anonymous
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