Saudi Arabia's cabinet has approved the creation of a new company to invest in manufacturing industries as the world's top oil exporter tries to diversify its economy and generate jobs, state news agency SPA said on Monday.

The new Saudi Arabian Company for Industrial Investment will have capital of 2 billion riyals ($533 million). "It will focus on conversion industries that rely on petrochemicals, plastics, fertilisers, steel, aluminium and basic industries (and) that achieve economic diversification," SPA reported.

The decision fits in with government efforts to develop a broad downstream industrial base, alongside the creation of industrial zones that take advantage of the kingdom's low energy costs and readily available raw materials.

Oil Minister Ali Al-Naimi has previously said that Saudi Arabia produces many raw materials and petrochemicals but does not invest enough in manufacturing finished products to generate jobs for its young people.

The new company is a joint venture between the finance ministry's Public Investment Fund, state oil firm Saudi Aramco and Saudi Basic Industries Corp (Sabic).

Sabic, Aramco and other state-owned companies produce large quantities of base chemicals, metals and other minerals.

Sabic, which has some shares traded on the Riyadh stock market but remains majority state-owned, is building a new synthetic rubber plant with US firm Exxon Mobil.

It will be the first synthetic rubber plant in the kingdom, and is aimed at satisfying increasing transport demand and vehicle use in the Middle East, Africa and Asia.

Aramco is expanding its investment with Japan's Sumitomo Chemical in Rabigh on the Red Sea coast while developing a major petrochemicals plant in Jubail with US company Dow Chemical. - Reuters