The local Al-Rajhi Steel’s proposed $500m direct reduced iron (DRI) plant in Saudi Arabia is still on hold due to issues over gas feedstock.

The proposed 1.8 million tonnes-a-year (t/y) plant in the Eastern Province of the kingdom has not yet been given a gas allocation from the Ministry of Petroleum and Mineral Resources, says a source familiar with the projects.

“It is still on hold and will remain that way until they secure the gas,” the source says. “A DRI plant needs a lot of gas and as everyone knows there are a lot of projects [in the kingdom] requesting allocations at the moment,” he adds.  

Al-Rajhi was not available to comment on the project being on hold when contacted by MEED.

The source also says that work on Al-Rajhi’s $213m rebar plant in Jeddah has started and is progressing well. “The contractor [Italy’s Danieli] has mobilised and engineering work is ongoing,” the source says.

Upon completion in early 2012, the plant will produce 1 million-t/y of reinforced steel bars used in the construction industry.   

Al-Rajhi is one of the top three steel producers in the kingdom. It also has a plant in Jeddah that produces 850,000-t/y of steel billets as well as two other plants in Riyadh producing bars and tubes, pipes and sheets with a combined capacity of 750,000-t/y.