RIYADH: Posco E&C has inked a $900 million joint venture with a Saudi Arabian construction company to build a hotel complex near a pilgrimage city of Madinah, officials said Tuesday. Posco and PECSA will work together to build a four-star hotel consisting of 3,070 rooms in five separate buildings, in Madinah Hajj City, a new city currently under construction to serve millions of visitors on their way to Madinah from Mecca.
PECSA is a joint venture established in January by the South Korean engineering firm and the Public Investment Fund, a sovereign wealth fund owned by Saudi Arabia. Posco holds 40 percent of shares in the venture, which was set up with capital of $35 million. The project is the first deal between Posco and PESCA, paving the way for South Korean firm to expand its business in the Middle East market. The joint venture between the South Korean and Saudi Arabian companies has suggested a stable business model in the market where many struggle with disputes between ordering companies and subcontractors.
Posco E&C will also share technological know-how with its Saudi Arabian counterparts to help develop the Middle East country’s construction industry. “With our company’s construction management technologies, which differentiate us from the local builders in Saudi Arabia, we will successfully complete the project,” said Posco E&C CEO Han Chan-gun. The company hopes to complete the project by February 2019. Madinah Hajj City, located 3 kilometers from the center of Madinah, is being developed on 1.6 square kilometers of land. The construction of the city is expected to cost about $16 billion. It will have facilities such as hotel complexes, offices, subway stations and shopping malls.
