(Yicai) July 26 -- Chinese state-owned metals giant Baoshan Iron and Steel said it will more than double its investment in a steel plate joint venture with Saudi Arabian partners Saudi Aramco and Public Investment Fund.

Baosteel will invest USD1 billion for a 50 percent stake in the JV, while Saudi Aramco and PIF will each spend USD500 million for a 25 percent stake, the Shanghai-based steelmaker announced yesterday.

According to the initial investment plan released in April last year, Baosteel would have invested USD437.5 million, and Saudi Aramco and PIF SAR8.2 trillion (USD218.3 million) each, for a 50:25:25 shareholding ratio.

The JV will build an integrated steel plate manufacturing complex in Saudi Arabia with an annual production capacity of 2.5 million tons of direct reduced iron, nearly 1.7 million tons of steel, and 1.5 million tons of steel plates, Baosteel noted. The products will be mainly supplied to the oil and gas, shipbuilding, maritime engineering, and construction industries in the Middle East and North Africa.

The complex, which would be Baosteel’s first green full-process steel project overseas, will boast a natural gas-based direct reduction iron furnace and an electric arc furnace to cut carbon dioxide emissions during steel manufacturing by more than 60 percent compared with traditional blast furnaces. It will be compatible with hydrogen to reduce carbon dioxide emissions by 90 percent.

The project is a perfect fit for the Saudi Vision 2030 and Belt and Road Initiative government programs and will promote economic exchanges between Saudi Arabia and China, Baosteel said.

Baosteel released the statement about the increased investment in the JV with Saudi Aramco and PIF just two days after announcing it would purchase Japan’s Nippon Steel’s half of Baosteel-Nippon Steel Automotive Steel Sheets for CNY1.8 billion (USD247.4 million) on Aug. 29.

BNA was set up in Shanghai by Baosteel, Nippon Steel, and European steel producer Arcelor-Mittal in 2004. In 2011, Arcelor-Mittal sold its entire 12 percent stake to Nippon Steel. BNA can make 900,000 tons of cold-roll steel sheets and 1.3 million tons of hot-dip galvanized steel sheets a year.

Saudi Aramco is one of the world’s largest oil producers and refiners, an important crude oil supplier to China, and a strategic customer of Baosteel.

Saudi Aramco has been particularly active in the Chinese market in recent years. For example, it formed a JV with China North Industries and Sincen Industrial Group to build a large refinery and chemical integrated facility and unveiled plans to buy a 10 percent stake in Chinese mainland-listed refining and chemical firm Rongsheng Petrochemical.

Editor: Futura Costaglione