Saudi Arabia has unveiled a flurry of new investment projects led by the world’s biggest steelmaker as the kingdom dangles incentives for companies willing to operate in its special economic enclaves.
China’s Baoshan Iron & Steel Co. will commit 15 billion riyals ($4 billion) to build a plant for steel plate manufacturing in a new economic zone in Ras Al-Khair on the kingdom’s eastern coast, according to an announcement made at an event in Riyadh on Monday.
Domestic names such as Himmah, which is establishing an auto-parts export hub catering to Africa and the Middle East, will drive capital into some of the other special areas that authorities are setting up across the country and which already attracted the likes of Lucid Group Inc. as anchor investors.
Saudi Arabia wants to turn the areas into gateways for investment by offering preferential corporate tax rates, exempting companies based there from many customs duties and allowing for full foreign ownership of businesses.
The effort to diversify the economy of the world’s biggest oil exporter is, in turn, leading to an economic embrace of China. Beijing and Riyadh have bolstered relations in recent years, with close to $50 billion of investment agreements inked during a China summit hosted by Saudi Arabia in 2022.
It’s part of a push by Saudi Crown Prince Mohammed bin Salman to open the $1 trillion economy to international markets and develop everything from heavy industries to tourism and technology startups. Another ambition is to compete with Dubai, the Middle East’s main commercial hub, by convincing companies to build a bigger presence in Saudi Arabia.
Last month, the crown prince announced the start of four new special economic zones. In total, they’ve attracted $12.6 billion, with an additional $31 billion in investments now in progress, according to a statement.
In the case of China’s Baosteel, the Saudi venture marks its first full-process production base overseas. To set up local operations, it’s joining forces with Saudi Aramco and the kingdom’s sovereign wealth fund.
--With assistance from Fahad Abuljadayel.