By Andy Sambidge
SABIC unit to operate facility in Lubail, eyes total production capacity of 6m tons
HSBC Middle East said on Sunday it had signed a $435m deal to finance a steel plant and rolling mill in Jubail, Saudi Arabia to be run by a unit of petrochemical giant SABIC.
Hadeed, a wholly-owned subsidiary of SABIC, aims to produce one million tons per year of pellets and half a million tons of rebar, the bank said in a statement.
With a total production capacity of six million tons, Hadeed will now be able to use their rolling mills at full capacity without relying on imported steel, it added.
Production from the new steel plant is expected to start in the second half of 2012.
The deal was announced on the same day that it was reported that Saudi Arabian export of petroleum products and liquefied natural gas last year reached the lowest levels since 2008, while exports of petrochemicals increased.
Exports of all petroleum products excluding crude oil from Saudi ports declined 14 percent between 2008 and 2010 to 39.6 million metric tons from 45.9 million tons, according to data posted on the Saudi Ports Authority’s website today.
Exports of liquefied natural gas in 2010 fell to 1.85 million tons from 2 million tons in 2008 and from 2.16 million tons in 2009.
Petrochemical exports reached 30.7 million tons in 2010 compared with 23.9 million tons in 2008 and 26.2 million tons in 2009, according to the data.
Olivier Khalife, who led the deal in HSBC's project and export finance team, said: "Steel consumption in Saudi Arabia has rapidly surged over the past few years on the back of a construction boom and growing investment in infrastructure.
"With this new Danieli equipment, Hadeed...will be able to provide Saudi Arabia and the wider region with very high specification wire-rod products which will domestically meet the needs of ongoing and planned projects."
This deal follows the $500m international financing deal for Emirates Steel in Abu Dhabi where HSBC also acted as sole facility arranger and agent in July last year.finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.