South Korea’s STX Heavy Industries (STX HI) is in final negotiations with Saudi Arabia’s Al-Rajhi Industrial Group to build two chemical plants worth a total of $1.1bn at Yanbu in the kingdom.

A source from STX HI tells MEED that final talks are taking place and a preliminary agreement has been signed.

“STX HI is pursuing a deal and if it is successful then two plants will be constructed using a joint ownership strategy,” the source says. “The location and budget of either plant has not been finalised yet and feasibility studies will have to take place before a final decision is made.”

The source adds the feasibility studies should be completed by the fourth quarter of 2011 and if construction goes ahead the plants will be completed by 2014.

The first plant will produce around 6,000 tonnes-a-year of polysilicon that is used in the production of solar panels. The second plant will produce 100,000t/y of linear alkyl benzene, which is used in detergent production.

Al-Rajhi is based in Riyadh and operates manufactures a number of different products that includes plastics, paper and polyester. The company will take a 51 per cent stake in the joint venture, with STX HI taking the remaining 49 per cent.