Luxembourg-based steel company Arcelor Mittal will complete fundraising for its SR2.5bn ($670m) seamless steel tube mill in November, according to bankers working on the project.

Local institutions will provide the financing for the project and the Saudi Industrial Development Fund (SIDF) is making a contribution, which has not been disclosed yet. Arcelor Mittal began approaching local banks in May.

It has been a difficult period for steel prices and that has impacted on the timeline for the project

Banker in Riyadh

Banque Saudi Fransi, Riyad Bank and Samba are lending money to the project. It is being developed at Jubail on the kingdom’s east coast.

“There is a lot of liquidity in the Saudi banks at the moment so projects looking for funding domestically are attracting a lot of interest,” says a banker involved in the project.

The plant is a joint venture between Arcelor Mittal and the kingdom’s Bin Jarallah Group.

Arcelor Mittal wants to build a seamless tube steel mill with capacity of 600,000 tonnes a year. The plant will supply pipes for the oil industry and it will open in 2011, according to the company. Arcelor Mittal says Saudi Aramco has agreed to buy some of the plant’s output.

Arcelor Mittal will hold a 51 per cent stake in the project and Bin Jarallah will hold 49 per cent (MEED 08:05:09). The plant will be the second seamless tube mill in the GCC.