Korean company to establish car assembly plant in Saudi
POSCO, one of the largest steelmakers in the world, signed a memorandum of understanding (MOU) to explore new business opportunities with Saudi Arabia’s sovereign fund, the company said Wednesday.
The steelmaker did not elaborate on the details of the agreement reached with the Saudi Arabian Public Investment Fund (PIF), but industry sources speculated it may be connected with Daewoo International Corporation’s push to help build an automobile assembly plant in the Kingdom.
According to company sources on Tuesday (June 17), POSCO chairman Kwon Oh-joon met with Abdulrahman M. Al Mofadhi, Acting Secretary General of the Saudi sovereign wealth fund and signed an agreement for mutual cooperation. Earlier in February he had discussed with Al Mofadhi before being appointed as POSCO chairman for a possible deal to build an auto plant.
At the signing ceremony, Daewoo International president Cheon Byeong-il, POSCO Engineering & Construction president Hwang Tae-hyun, and POSCO Capital president Choi Myung-ju were in attendance.
The automobile assembly plant project led by Daewoo International calls for building an assembly plant churning out 2.0- to 2.4-liter mid-sized cars for the Saudi middle class at the cost of $1 billion. Most of the investment fund will be paid for by the Public Investment Fund. Al Safar Group of Saudi Arabia will be an investor in the project through a special purpose corporation called SNAMC.
Daewoo International will be responsible for the whole project management work including automobile design and parts procurement. POSCO will be charged with supplying steel sheets while POSCO E&C with plant construction.
The plant will be up and running by the second half of 2017. In addition to the automobile plant project, POSCO and the Public Investment Fund will work together in the areas of housing development, plant, and pipeline construction projects as well.
Saudi Arabia is hoping to build an automobile plant capable of producing 150,000 cars a year from 2017 onwards to meet domestic demand and even cater to an export market.
The Kingdom, with a population of some 29 million people, reported annual car sales hovering at 700,000 units last year.
- From a retail tycoon to Amal Clooney: meet the Arab World's most powerful women
- Why Egypt's upcoming economic summit can be a 'backbone' for growth
- The Syrian influx and the child labor problem in Jordan
- Time to face the fundemantals: GCC economies need fiscal reform to handle oil price volatility
- Contours of US-Iranian nuclear deal shaping up