Saudi Arabia’s Atoun Steel Industry’s (ASI) $265m steel plant project at Yanbu is still on hold due to a delay in the facility’s fuel allocation.

The 1 million tonnes-a-year plant is still awaiting approval from the Ministry of Petroleum and Mineral Resources despite the fact that steel demand in the kingdom has started to rise.

“The plant has been suffering delays, as ASI is still waiting for its [fuel] allocation,” says a source close to the project. “The contractors are not working at present and there is no timeframe in place for when work will start again.”

The contractor in charge of the project is Austria’s Saudi Voest-Alpine and no-one was available for comment when MEED contacted the company’s office at Dammam in the kingdom.

The plant is set to produce 500,000-t/y of steel billets and 500,000-t/y of steel rebar, reinforced bars used in the construction industry, when completed. According to MEED Projects the second quarter of 2012 is the completion date for the facility.

ASI has been granted a loan of around $147m from the state-owned Saudi Industrial Development Fund to help cover the cost of constructing the plant.