Saudi Arabia’s Al-Rajhi Steel has rejected the commercial and technical bids for the engineering, procurement and construction (EPC) packages at its planned $3bn steel complex.

The bids have been vetoed by Al-Rajhi Steel due to them being over the budget the company had planned for the complex, at King Abdullah Economic City near Jeddah.

“Obviously, all of the bidders were disappointed with the decision, but they all have to accept it,” says a steel industry source based in Saudi Arabia. “They are all hoping that the scope can be reconfigured and made to work, but at the moment there is no concrete timeline in place for this.”
Another source says that he expects Al-Rajhi Steel to return the bid bonds, which means that any changes would have to be retendered from the beginning.

The project was being fast-tracked because of a time limit placed on gas allocation from Saudi Aramco. It is not clear when Al-Rajhi Steel is going to make a decision on the complex or how any delay to the scheme will affect the gas allocation it has secured from Saudi Aramco. The company was not available for comment when contacted by MEED.

The partnerships who bid for the joint technology EPC contracts included:

  • Danieli (Italy)/Daelim Industrial (South Korea)
  • Midrex (US)/Siemens Steel (Austria)/Samsung Engineering (South Korea)/SMS Meer (Germany)
  • Tenova (Italy)/SMS Siemag (Germany)/Hyundai Engineering & Construction (South Korea)

The original scope of works for the Al-Rajhi complex included a direct-reduced iron (DRI) plant producing 1.8 million tonnes a year (t/y) of steel, two steel shops produce billets, blooms and slabs, a mill producing long products and a mill producing flat products, as well as a cold-rolling process plant.

Now it is unclear whether Al-Rajhi Steel will completely reconfigure this or if they will just decide to carry out the project in a more conventional phased format. This again will depend on any agreement they have with Saudi Aramco regarding the gas allocation.