CIFA, July 25 (Reporters Liu Mengran and Zhang Liangde) Cooperation between PIF (Saudi Arabia Public Investment Fund) and Chinese enterprises is deepening. This evening, Baosteel Co., Ltd. (600019.SH) announced a joint investment with Saudi Aramco (“Saudi Aramco”) and PIF to establish the Saudi Thick Plate Company.

A CIFA reporter noticed that this month, PIF also set up joint ventures with three other Chinese new energy companies, namely Jinko Energy (688223.SH), TCL Central (002129.SZ), and Envision Technology Group. The cooperation projects involved upstream photovoltaic manufacturing and wind power equipment.

Tonight, Baosteel Co., Ltd. said in an announcement that in order to promote Saudi Arabia's “Vision 2030” and “Belt and Road” initiatives, Baosteel, Saudi Aramco and PIF will jointly invest in the establishment of the Saudi Thick Plate Company (tentative name) to build a green, low-carbon thick plate factory in Saudi Arabia.

Currently, the Middle East is becoming a popular destination for Chinese manufacturers to go overseas. Also tonight, photovoltaic cell manufacturer Junda Co., Ltd. (002865.SZ) announced that it plans to invest 0.28 billion US dollars in the construction of a 5GW high-efficiency battery production base project in Oman. A person from a listed company said that joining forces upstream and downstream of the industrial chain to go overseas is also an effective way to resolve the current mismatch between supply and demand for photovoltaic production capacity.

The total investment in the new plan for the Saudi thick plate project reached 4.543 billion US dollars

Baosteel Co., Ltd. announced after the market today that it will increase the investment amount of Saudi Heavy Plate Company. The registered capital of the project will increase from the original plan of 3281.25 million riyals (equivalent to 0.875 billion US dollars, or about 6.009 billion yuan) to 2 billion US dollars, an increase of 128.57%.

The shareholding ratio of all parties to the project remained unchanged. The investment amount of Baosteel shares increased from the original plan of 0.4375 billion US dollars to 1 billion US dollars, holding 50% of the shares; the investment amount of Saudi Aramco and the Saudi Public Investment Fund increased from the original plan of 0.82 billion riyals to 1.875 billion riyals (equivalent to 0.5 billion US dollars), each holding 25% of the shares.

According to the announcement, the total investment in the project was 4.543 billion US dollars. In addition to shareholders' contributions, Baosteel Co., Ltd. will provide a financing guarantee not exceeding the equity ratio (50%) for the joint venture, and the principal amount of the guarantee loan shall not exceed 1.067 billion US dollars.

The original plan of the project was to build a full-process steel manufacturing base with a design capacity of 2.5 million tons of direct reduced iron and 1.5 million tons of thick plate. It is aimed at producing high-end thick plate products, mainly serving various strategic industrial fields such as oil and gas, shipbuilding, marine engineering, and storage tank and pressure vessel manufacturing in the Middle East and North Africa. According to the new project construction presentation, it is said that Saudi Arabia will invest in the construction of the world's most competitive green low-carbon thick plate factory, producing 2.5 million tons of direct reduced iron, 1.5 million tons of thick plate, and 1.667 million tons of steel per year, mainly serving the oil and gas, shipbuilding, offshore and construction industries in the Middle East and North Africa region.

The base was originally planned to be put into operation by the end of 2026, but in the newly disclosed project plan, 1.667 million tons of steel production was added, and customers were extended to the construction industry. Judging from the above increases, the project may increase production lines for construction materials or profiles.

Baosteel said that this project is a perfect fit between Saudi Arabia's “Vision 2030” and the “Belt and Road” initiative. It is an important step for China's Baowu and Baosteel Co., Ltd. to cultivate world-class enterprises and promote internationalization strategies. It is also Baosteel's first full-process steel project in an overseas green area.

Wang Guoqing, director of the Langer Steel Research Center, said that the Saudi project is a key part of Baosteel's international expansion strategy. As a major global oil producing region, the Middle East region has strong demand for oil, gas and offshore engineering steel. Baosteel's product quality has a significant competitive advantage in the region. While enhancing the relationship between the two countries, it also helps promote the modernization process of the local steel industry.

The implementation of this project will help promote economic exchanges between China and Saudi Arabia, and is expected to become an exemplary project for Sino-Saudi economic cooperation. In recent years, China and Saudi Arabia have strengthened economic cooperation.

Listed companies join forces to “nugget” the Middle East

In addition to Baosteel Co., Ltd., quite a few Chinese companies have recently announced investments in Saudi Arabia, and new energy is an even more popular field. In July of this year, Jinko Energy, TCL Zhonghuan, and Envision Technology Group announced the establishment of a joint venture in Saudi Arabia. According to the announcement, JinkoEnergy will build a 10GW high-efficiency battery and module project in Saudi Arabia, and TCL Central will build a 20GW photovoltaic crystal chip project with an annual output of 20GW, with a total investment of 0.985 billion US dollars and 2.08 billion US dollars, respectively. The investment projects all use joint ventures. According to Jinko Energy and TCL Central, PIF holds 40% of the shares through its wholly-owned subsidiary RELC.

A business leader of a listed company told the Financial Federation reporter today that going overseas for photovoltaic production capacity is the only way to develop. Saudi Arabia and other Middle Eastern countries are also proposing local manufacturing plans. Upstream and downstream of the industrial chain are going overseas in groups, and establishing a local supply chain with the support of common values and ideas can better achieve sustainable development. It is also an effective way to resolve the current mismatch between supply and demand for photovoltaic production capacity.

After the Middle East was decided to be the next stop for PV going overseas, more investment projects continued to be launched. Following the announcement of plans to set up a battery factory in Oman in June of this year, Junda Co., Ltd. progressed rapidly: the company announced this evening that it has set up an investment, operation and management entity for this project to build a 5GW high-efficiency battery production base in Oman. The project plans to invest a total of 0.28 billion US dollars and is expected to be completed and put into operation in 2025.

In mid-June of this year, the company announced that it had signed an “Investment Intent Agreement” with the Oman Investment Authority to invest in the construction of 10 GW of high-efficiency photovoltaic cells per year in Oman. The project will be implemented in two phases, 5 GW each. According to the latest announcement, the company established Jietai New Energy Technology (Oman) Sohar Free Trade Zone Co., Ltd. as the main project on July 17 this year. The 5GW project is located in the Sohar Free Trade Zone in the Sultanate of Oman, and the construction period is about 9 months.

The main business of Junda Co., Ltd. is the production and sale of photovoltaic cells. In the first half of the year, it shipped 19.21 GW of battery products (of which 16.43 GW was shipped for type N, accounting for 85.5%). As early as the beginning of this year, Junda Co., Ltd. indicated that it intended to deploy overseas production capacity. In terms of sales share, the company achieved overseas sales of 0.431 billion yuan in the first quarter, and the share of overseas sales increased to 11.62%.

The preferred overseas production base of Junda Co., Ltd. is Oman. The company believes that the project is located at the core of trade routes between Europe and Asia, is close to the vast markets of the Middle East and Eurasia, and has a strong international trade location advantage.

According to Junda Co., Ltd., Oman has signed long-term free trade agreements with major Western countries, and the Sohar Free Trade Zone also has corresponding preferential policies for import and export business, which is conducive to international sales of photovoltaic products produced by the company in Oman.