Baosteel (600019.SH), which has been steadily laying out in "going out", has taken an important step during the May Day holiday.

Reporter learned today that Baosteel today formally signed a contract with Saudi Arabian National Oil Company (hereinafter referred to as "Saudi Aramco") and Saudi Public Investment Fund (hereinafter referred to as "PIF") to jointly build the world's first green low-carbon full-process thick plate plant in Saudi Arabia. process thick plate plant in Saudi Arabia.

The first overseas full-process production base

According to the agreement, the three parties will jointly invest in the joint venture company, with Baosteel holding 50% of the shares and Saudi Aramco and PIF holding 25% respectively.

After the establishment of the joint venture company, it will build a full-process steel manufacturing base with an annual design capacity of 2.5 million tons of direct reduced iron and 1.5 million tons of thick plate, which is located in the production of high-end thick plate products, mainly serving the Middle East and North Africa in the oil and gas, shipbuilding, offshore and storage tank and pressure vessel manufacturing and other strategic industrial fields.

According to the reporter's understanding, the base is expected to be put into operation by the end of 2026, which will also be Baosteel's first full-process production base overseas. However, the implementation of the project is still subject to approval, filing and registration by relevant regulatory bodies.

There are three main forms of international layout of steel companies: first, the primary product form, including exporting products and buying spare parts to maintain production; second, transnational investment layout of production and processing bases to achieve the internationalization of markets and capital; third, the internationalization of research and development.

Before that, Baosteel had internationalized through exporting steel products and purchasing the equity of Australian mining enterprises, but it has been more cautious in the investment layout of overseas steel mills.

For this overseas plant, Baosteel said it is an important measure to implement the strategic deployment of the Party Central Committee to promote the high-quality development of "One Belt and One Road", and also to implement the "three highs and two masters" (high-tech, high market share, high efficiency and ecology, internationalization) of Baowu Group. It is also a strategic deployment of Baowu Group.

Saudi Aramco "repositioned" in China market

It is worth noting that PIF, the joint venture with Baosteel, is a Saudi sovereign fund and the world's largest sovereign wealth investment fund, while Saudi Aramco, on the other hand, is one of the world's largest oil producers and refiners, as well as an important crude oil supplier to China and a strategic customer of Baosteel.

As the world's largest integrated energy and chemical company, Saudi Aramco is mainly engaged in oil exploration, development, production, refining, transportation and sales.

Since this year, Saudi Aramco has made frequent moves to "reposition" itself in the Chinese market. Ltd. in Panjin City, Liaoning Province, a joint venture with North Industries Group and Panjin Xincheng Industrial Group, which plans to build a large integrated refinery and chemical plant, including a refinery with a processing capacity of 300,000 barrels per day and a chemical plant with an annual capacity of 1.65 million tons of ethylene and 2 million tons of paraxylene. Ltd., a leading private refining and chemical company, announced its intention to acquire a 10% stake in Rongsheng Petrochemical (002493.SZ) for a total consideration of 24.6 billion yuan.

In addition, Saudi Aramco also signed a non-binding memorandum of cooperation with the Guangdong Provincial People's Government, aiming to help develop a modern and sustainable petrochemical industry in Guangdong Province.

The production base to be jointly built with Baosteel is in Saudi Aramco's home base, which will make full use of the abundant natural gas and green electricity resources in Saudi Arabia and adopt the process path of "vertical furnace + electric furnace".

Baosteel revealed that the project will be equipped with a natural gas-based direct reduction iron furnace and an electric arc furnace, aiming to reduce CO2 emissions in the steelmaking process by more than 60% compared to traditional blast furnaces. In the future, it will also be compatible with hydrogen, and CO2 emissions are expected to be reduced by 90%. This is also a landmark project for Baowu Group and Baosteel to practice green and low-carbon development strategy.