We use cookies
To help provide you with a good experience on our website. By continuing to browse the website, you are agreeing to our use of cookies.

China and Saudi Arabia are teaming up on steel decarbonisation


China and Saudi Arabia are teaming up on steel decarbonisation

China and Saudi Arabia have in recent months signed multibillion-dollar energy deals. The kingdom has pledged to support China’s energy security, and Beijing has welcomed Riyadh into the Shanghai Cooperation Organization, the political and security bloc led by China and Russia.

Source: Yahoo Finance

And now, the burgeoning Sino-Saudi relationship is expanding to encompass another major undertaking: decarbonizing steel production.

Last week, China’s Baosteel—the world’s largest steelmaker—signed a deal with state-owned oil giant Saudi Aramco and Riyadh’s sovereign wealth fund to jointly set up a steelmaking manufacturing base in Saudi Arabia.

The joint venture will be 50% owned by Baosteel, while the two Saudi partners will take 25% each. The plant is expected to produce 1.5 million tons of steel plate per year, according to the companies.

Saudi Arabia wants to cut its steel import reliance

The facility will be equipped with a steelmaking technology called direct reduced iron-electric arc furnace (DRI-EAF), which is typically natural-gas based and is significantly less carbon intensive than traditional coal-fueled blast furnaces. The DRI-EAF setup also can be adapted for hydrogen, the companies said, which would further reduce carbon emissions.

The deal ticks off key strategic objectives for both countries, said Mihir Vora, a principal analyst for steel and raw material markets at the energy consultancy Wood Mackenzie.

The JV will support Saudi Arabia’s bid to boost sustainable steel manufacturing, create jobs, and focus on supply security by reducing reliance on finished steel imports.

Mihir Vora, a principal analyst for steel and raw material markets at the energy consultancy Wood Mackenzie

It will also “drive international revenues for Baosteel” at a time when Chinese domestic steel demand is declining, and also support the steel giant’s decarbonization goals.

China’s Baosteel wants to grow its global presence

Baosteel has been clear that expanding its global footprint is key to the company’s continued growth—and survival.

Without internationalization, we will not be competitive in the future, and just like a frog in warm water, we will eventually be eliminated.

Baosteel’s chairman

Bringing together a Chinese steel juggernaut and Saudi Arabia’s energy prowess could make for a formidable partnership as the global steel industry works toward making carbon-neutral “green” steel. A report last year by the US-based Institute for Energy Economics and Financial Analysis found that the Middle East and North Africa region is particularly well placed to lead global steel decarbonization.

The strategic benefits from Chinese steel manufacturing capability and Saudi Arabia’s access to energy resources can act an influencer in deepening China-Saudi Arabia relationship in the energy and manufacturing space.

Mihir Vora, a principal analyst for steel and raw material markets at the energy consultancy Wood Mackenzie

Relevant news

JERA unveils 2035 growth strategy leading decarbonization as a responsible energy solutions provider
JERA has set the following goals: LNG, Renewables and Hydrogen & Ammonia by 2035.
TotalEnergies and Sinopec strengthen cooperation
TotalEnergies and SINOPEC plan to combine their R&D expertise in biofuels, green hydrogen, CCUS and decarbonization.
Seatrium signs agreement with ABS to accelerate decarbonisation and energy transition
Seatrium and ABS will focus on four key themes: Decarbonisation, Electrification, New Energies, and Digital Transformation.
LyondellBasell, Genox open plastics recycling JV in China
LyondellBasell plastic recycling plant will use mechanical recycling technology to recycle plastic waste and produce new polymers.
Sinopec starts production at 3 mln ton per year PTA plant
The facility has the largest single unit PTA production capacity in the world.
ExxonMobil commits $1.4 billion investment to ethylene project in China
ExxonMobil shared this strategic investment news during a conference dedicated to high-quality development in Guangdong Province.