Saudi Basic Industries Corp's (Sabic) affiliate Hadeed said on Sunday it had signed a deal with Italian foundry equipment maker Danieli for the construction of a steel plant in Saudi Arabia.

The plant would have a production capacity for steel billets of 1 million tonnes per year, Hadeed said in a statement posted on the Saudi bourse website.   

The project would begin in the second half of 2012, the statement said.

Sabic controls 100 percent of Hadeed.

In August, Danieli was awarded the contract to build a 800 million riyal steel ($213.3 million) plant for Al-Rajhi Steel, one of Saudi Arabia's three largest steel companies. -Reuters