RIYADH: In a major move to promote the steel industry in the Kingdom, the Banque Saudi Fransi (BSF) has come forward as a sole financing agent and has signed an SR912.5 million deal to finance the South Steel Co. project, one of the largest steel projects in the Gulf region. On behalf of the bank, the deal was inked by Jean Marion, BSF managing director; while Sulaiman Saleem Al-Harbi, chairman of Saudi Pan Kingdom Holding Co. (SPKH) signed, on behalf of South Steel Co.
“The BSF is a strong bank and it continues to lend funds for good projects even in this period of global economic downturn,” said Marion, while speaking to newsmen after the signing ceremony at the BSF Headquarters here yesterday. The event was attended by several senior bankers and SPKH executives including Abdulrahman Al-Jawa, BSF’s deputy managing director, and Mohammed Al-Jedia, South Steel Company’s managing director.
The first phase of South Steel Co. project, which has a paid-up capital of SR450 million, will attract total investment of SR1.3 billion. The BSF has made available SR912.5 million for this project, which will kick off production in 2011. This steel project is being promoted by SPKH, which owns 60 percent of the project, while 40 percent is divided into three partners including the UAE-based Dubai Investments Industries (DII), which has acquired a 10 percent stake.
Referring to the project, Marion said “This is an important project especially for the development of Jazan region.” He said that the bank was still working on many project proposals for finance. He bragged that the BSF was on the forefront to boost finance and loan syndications, maintaining its strong position in Shariah-compliant finance. “The bank has reported profits in 2008,” said the BSF chief, predicting that there will be growth, though minimal, in the Saudi economy this year also. “Hence, there will be opportunities,” he added.
Spelling out the salient features of the South Steel Co. project, Al-Harbi said that the project will be set up in three distinct phases. The first phase, on which the construction will start soon, will produce 1.5 million tons of steel of different kinds. Al-Harbi said that “there was a growing demand of steel in the Kingdom, and even on regional level, Middle East is one of the fastest growing markets for steel in the world.” He said, “As a high-capacity plant incorporating state-of-the-art technology features, South Steel Company will be uniquely positioned to cater to the huge demand”.
The built-up area of the steel factory in Jazan Economic City will be 6000 square meters out of a total area of one million square meters. Promoted by SPKH, the new steel plant will be set up with technological assistance from Germany-based SMS Group, to produce top-quality steel billets and reinforcement bars in accordance with international standards.