The scheme, called the Gulf United Steel Company, is expected to produce 3.5m tonnes of steel a year.

The banks included in the talks are Jordan's Arab Bank, Banque Saudi Fransi, France's Societe Generale, and Mizuho and Sumitomo Mitsubishi Banking Corporation, both Japanese.

The project was initially planned in late 2007, when the company was in talks with the UK's HSBC, Bahrain's Arab Banking Corporation, and France's BNP Paribas on the project.

At that time steel prices were rising as demand increased. However, the global economic slowdown has had a significant effect on steel prices, which could affect appetite to fund the project.