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Kallanish Kallanish

Knowledge matters Knowledge matters

September, 17th 2021

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AUG 04
12:51

ArcelorMittal’s Saudi JV completes seamless pipemaking rival acquisition

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ArcelorMittal Tubular Products Jubail (AMTPJ) has completed the acquisition of Jubail Energy Services Company (Jesco) from TAQA Industrialization and Energy Services Company.

AMTPJ – ArcelorMittal's joint venture with Saudi Arabia’s Public Investment Fund (PIF) – is now the undisputed sole seamless pipe producer in the Middle East, with a combined annual capacity of 1 million tonnes.

The transaction creates a “regional champion” by combining Saudi Arabia’s two leading tubular products producers, ArcelorMittal says. It is set to bring multiple benefits, such as improved cost competitiveness across multiple areas including raw material procurement, strengthened financial position, sales and marketing logistics, inventory optimisation, and asset utilisation, it adds.

TAQA agreed to sell its 72% stake in Jesco to ATPJ last December (see Kallanish passim).

ArcelorMittal’s shareholding in AMTPJ, which will operate under the joint management control of ArcelorMittal and PIF, will reduce to approximately one third – from 41% – with PIF’s shareholding correspondingly increasing to approximately two thirds.

Incoming AMPTJ chief executive Gabriel Monti says: “Combining AMPTJ with Jesco creates a new regional champion capable of delivering first-class products and services to our expanded customer base. I’d also like to thank the Ministry of Investment of Saudi Arabia for the enabling role it played in facilitating this transaction.”

Saudi Arabian oil giant Aramco is the country’s biggest buyer of seamless pipe. The kingdom has already tendered $58 billion of construction and transportation contracts in 2021, out of $1 trillion of planned projects, which are set to lift steel demand.

Gulf Cooperation Council market participants often cite the lack of round billet feedstock supply in the region as an obstacle to seamless pipemaking development in the region. ATPJ typically sources from within the ArcelorMittal group, while Jindal Shadeed in Oman became the GCC’s first round billet producer in 2014; it remains the only supplier to this day.

Burak Odabasi Turkey