The Saudi Basic Industries Corporation (SABIC) has entered into a new agreement with the joint venture between the Public Investment Fund (PIF) and Pirelli to supply key raw materials, polybutadiene rubber, and carbon black, for the production of 3.5 million tires annually.
This strategic collaboration marks a significant step in strengthening Saudi Arabia’s role in the global automotive manufacturing sector.
The agreement is part of SABIC’s ongoing commitment to supporting national downstream industries and advancing local content development in the Kingdom, through its localization initiative Nusaned.
The agreement marks a historic first, as it establishes the supply of raw materials for local tire manufacturing in Saudi Arabia. This collaboration will support the production of tires at the King Salman Automotive Cluster, located within the King Abdullah Economic City.
According to the statement, the move underscores a significant milestone in the Kingdom’s efforts to enhance its automotive manufacturing capabilities and promote domestic production of high-quality tires.
Earlier this year, SABIC signed two strategic transactions to divest its European Petrochemicals (EP) business to AEQUITA and its Engineering Thermoplastics (ETP) business in the Americas and Europe to MUTARES, for a total combined enterprise value of $950 million.
According to the reports, these transactions represent key milestones in SABIC’s strategic portfolio optimization efforts. The divestments are designed to pave the way for future growth, reinforcing the company’s long-term market position and maximizing value for stakeholders.
These divestments are expected to enhance SABIC’s performance, including by increasing overall EBITDA margins, improving free cash flow generation, and supporting higher return on capital employed (ROCE).
