Saudi Arabian steel production costs rise

22 July 2010

Power tariffs mean a rise in production costs of 7 per cent in the kingdom

The cost of producing steel in Saudi Arabia will rise by 7 per cent after the state-owned Saudi Electricity Company (SEC) imposed power tariffs.

Mutlaq Al-Murished, vice president finance of Saudi Basic Industries Corp (Sabic) is quoted in the local Arab News as saying that the decision by SEC to increase power tariffs for the government, commercial and industrial sectors was the reason for the increase.

Sabic owns the biggest steel manufacturer in the kingdom, the Saudi Iron and Steel Company (Hadeed). In 2009 Hadeed produced around 4.78 million tonnes of steel which accounts for 62 per cent Saudi Arabian production.

Hadeed is currently building a $630m steel billets factory at Jubail in partnership with Saudi Arabian Fertilser Company. The facility will have a capacity of 1 million-tonnes-a-year when completed.

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