Luxembourg-based steel company ArcelorMittal is seeking long-term debt to finance its SR2.5bn ($670m) seamless steel tube mill in Saudi Arabia.

The deal is being led by the local Banque Saudi Fransi and Riyad Bank, which provided a SR2bn financing package in 2011 to fund the project through its construction phase. The new funding will be used to replace the existing debt with longer-term funding.

“A few local banks have been approached about putting in place a new financing with a longer tenor, now that construction of the project is almost complete,” says one banker in Riyadh. ArcelorMittal and its existing lenders on the project are understood to want to complete the deal before the end of August.

The plant is a joint venture of ArcelorMittal, which will hold 51 per cent of the equity, and the local Bin Jarallah Group, which will own the remaining 49 per cent. The plant will be the second seamless tube mill in the GCC and is expected to sell its produce to state oil firm Saudi Aramco, as well as other oil companies in the region.