A SR10bn ($2.6bn) steel plant is being constructed in Jazan Economic City, Saudi Arabia.

The plant's first phase will be ready by the end of this year and start production early next year to support the region’s construction boom.

The plant comes ahead of an expected construction boom in the southern region, the company said in a statement. The project is geographically located near neighboring and consuming countries such as Yemen and North African countries.

"This is the first such project in the southern region," said Faiz Nasser Al-Dossary, executive director of South Steel. He disclosed plans to establish a number of related plants inside the complex.

"We have completed the first phase of the project covering a million square meters at a cost of SR1.3bn ($350M)," Al-Dossary said, adding that its steel mill would produce 1Mt/y of steel billets and 500kt/y of rebar.

The company is owned by Pan-Kingdom Investment and Qatar Steel Company

South Steel will produce steel through the EAF-CC route, and therefore, depend on import of raw materials such as DRI/ HBI & steel scrap. It will supply 1Mt of liquid steel, 1Mt of billets of sizes 130x130mm sq and 150X150mm sq, at casting speeds of 4.5 and 3.8m/min respectively, and 0.5Mt of construction quality rebars.

South Steel's five-year plan includes construction of a new rolling mill by 2012 to supply 0.5Mt of rebars, a Cut-to-length & Bending Process Unit to process 100kt/y and an Epoxy coating unit to process 60kt/y at a total investment of SR450M.

The plan includes construction of a new melt shop of 1Mt/y to produce billets, rebars and rods at a total investment of SR1.6bn by 2014.

A palletizing plant to produce 6Mt/y of green pellets and an Iron Ore Hub to handle 12Mt/y will be built by 2015, the company said. Beyond 2015 it intends to establish a new melt shop and DRI plant to produce 1Mt/y of slab and blooms and 2.6Mt/y of DRI.

The project is being implemented by South Korean STX group, which has established steel plants in several countries.

Saudi Industrial Development Fund (SIDF) is the major source of funding while the balance has been raised from commercial loans and share capital. Major shareholders are PKI, with Qatar Steel also having a substantial holding. Other investors include Dubai Investment, Al-Jedaie Group, Hamed Bin Hamed Al-Mutabakani.

Source: Daily Arab News, Riyadh