Saudi Basic Industries Corp. (Sabic), the largest Gulf Arab steel producer, said it plans to help develop a $1.5 billion iron project in Mauritania.

The project will reduce Sabic's dependency on ore imports from Sweden and Brazil.

State-controlled Sabic, also the world's largest chemical company by market value, has agreed to partner Australia's Sphere Investments Ltd., Mauritanian iron ore producer Societe Nationale Industrielle et Miniere (SNIM) and Industries Qatar in the project to produce high quality iron ore, it said in a statement on the Saudi bourse Web site on Monday.

'This will reduce greatly our dependency on imports of iron ore from Sweden and Brazil, which tend to be costly,' Mutlaq al-Morished, Sabic's chief financial officer told Reuters.

The 7 million tonne-per-year project, to be completed in 2010, will help 'secure supplies for Sabic's iron and steel plants with high quality iron ore,' Sabic said.

Sabic's 35 percent stake in the project will cost about $262 million, it said. It will take 35 percent of the production for its plants, and buy the output share of SNIM and Sphere, Morished said.

State-controlled Industries Qatar said in March its unit, Qatar Steel Company, had agreed with Sabic, SNIM and Sphere to set up the joint venture company called Newco.  It did not give a value for the project.

SNIM and Sphere control the venture with a 50.1 percent stake, Qatar Industries said. Qatar Steel owns 15 percent, according to Doha-based Gulf Times. - Reuters