French building materials group Lafarge has signed a SR1.125bn ($300m) deal to finance the development of its cement plant in the Western region of Saudi Arabia.

The loan was signed in December 2010 after a long period of gestation with the banks, which had been hoping to complete the deal in July last year (MEED 08:06:10).

The funds will be provided by the local Samba and Arab National Bank, with an additional loan from the Saudi Industrial Development Fund also expected to help fund the cost of the project. The bank loan has a tenor of seven years and is priced at more than 200 basis points above the Saudi interbank offered rate.

The plant, based near Jeddah, is a joint venture between Lafarge and Dubai-based investment group Al-Khayyat, and is operated under the Al-Safwa Cement Company with a production capacity of 1.4 million tonnes a year (t/y).

Construction of the plant is already completed, and the project finance replaces a bridge loan that was put in place to allow construction to go ahead.

Lafarge is also working on the development of a cement plant in Karbala in Iraq. The 2 million t/y project will be developed as a joint venture with UK investment firm MerchantBridge (MEED 14:01:11).