(Yicai Global) May 4 -- China's Baoshan Iron and Steel, the world's largest iron and steel maker also known as Baosteel, said it will invest USD437.5 million to build its first overseas steel mill in Saudi Arabia with oil producer Saudi Aramco and the kingdom’s sovereign wealth fund.

Baosteel inked a deal to set up a joint venture with Aramco and Public Investment Fund on May 1, the Shanghai-based firm said yesterday. Baosteel will own half of the JV, while the other two will split the rest and invest SAR8.2 million (USD2.2 million) each, it added.

The full-process iron and steel foundry will have an annual design capacity of 2.5 million tons of direct reduced iron and 1.5 million tons of thick plates, Baosteel noted, adding that it is scheduled to become operational at the end of 2026.

The plant is the first of its kind in the Gulf Cooperation Council area and will mainly supply industries in the Middle East and North Africa, including oil and gas, shipbuilding, offshore engineering, storage tanks, and pressure vessel making, the firm added.

It will have a natural gas-based direct reduced iron furnace and an electric arc furnace, aiming to cut carbon dioxide emissions from the steelmaking process by more than 60 percent compared to conventional blast furnaces. The mill will be able to use hydrogen in the future, likely reducing its CO2 emissions by 90 percent.

Baosteel said the Saudi Arabian project is subject to regulatory approval.

The company has previously exported iron and steel and bought shares in Australian mining firms to expand globally, but it has been prudent in investing in overseas steel mills. 

Editor: Martin Kadiev