Sabic plans to tender $4.2bn steel plants

26 February 2014

Product slates aimed at providing raw materials to Saudi conversion industries

Saudi Basic Industries Corporation (Sabic) has finished its feasibility study for the two steel plant projects it plans to build in Saudi Arabia and is expected to start the prequalification process for the construction tenders in the second quarter of 2014.

MEED reported in June 2013 that both plants will be built and operated by Sabic’s steel subsidiary, Hadeed, and will have a combined capacity of 2.5 million tonnes a year (t/y).

One of the schemes will be a plate mill and will be built at Hadeed’s existing complex at Jubail in the Eastern Province of the kingdom.

The plate mill will have a capacity of 1.5 million t/y and will house a direct reduced iron (DRI) facility with a capacity of 2 million t/y. The excess DRI will be used internally by other facilities within the Hadeed complex.

The second project will be a cold mill and will be constructed at Rabigh on the Red Sea coast of the kingdom. The greenfield plant is being aimed at providing raw materials for use in several downstream industries including automotive and electrical. The product slate will include 150,000 t/y of both cold rolled products and automotive sheets, 350,000 t/y of hot dip galvanised steel sheets and 350,000 t/y of tin plate product. The facility will also produce an as yet to be determined amount of electrical sheets to be used in the power industry.

Sabic has already stated that the combined budget for both projects will be about $4.2bn and a gas allocation has already been agreed with the Oil Ministry. The company has also said it expects both plants to be in operation by 2018, indicating that contract awards will have to be made by the end of 2014 or early 2015 at the latest.

“Both of these schemes are being planned to provide raw materials to drive diversification in the kingdom,” says a steel industry source based in Saudi Arabia. “They are also the region’s largest active steel plant projects that have the best chance of being awarded during 2014.”

The prequalification process is expected to begin with potential technology providers for both schemes. Italy’s Danieli, Germany’s SMS Group and Austria’s Siemens Steel are all almost certain to participate, although other technology providers who meet Sabic’s prequalification criteria will also be invited.

The prequalified technology providers will then be expected to form a consortium with an international engineering, procurement and construction (EPC) contractor to bid for both schemes.

Sabic is 70 per cent state-owned, with the remaining 30 per cent traded on the Saudi stock exchange (Tadawul).

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