The Saudi Basic Industries Corporation (SABIC) has signed a landmark agreement to supply key raw materials for the first major tire manufacturing operation in the Kingdom of Saudi Arabia, according to an official announcement from the Saudi Press Agency (SPA). The agreement, signed on February 15, 2026, will see SABIC supply polybutadiene rubber and carbon black to the joint venture between the Public Investment Fund (PIF) and the global tire manufacturer Pirelli. This supply will support the production of 3.5 million tires annually at the King Salman Automotive Cluster within King Abdullah Economic City, marking a significant milestone in the development of Saudi Arabia’s automotive and industrial supply chains.
Context and Background
This agreement represents a strategic step in the Kingdom’s ongoing efforts to diversify its economy beyond oil and build a robust, integrated industrial ecosystem. The initiative is part of SABIC’s broader Nusaned™ localization program, which is designed to foster in-Kingdom value creation, support downstream industries, and enhance local content. By securing a domestic supply of critical raw materials for a major manufacturing project, Saudi Arabia is reducing import dependency and creating a more resilient and self-sufficient industrial base. The selection of the King Salman Automotive Cluster as the production site underscores the Kingdom’s commitment to developing specialized economic zones that attract global investment and advanced manufacturing.
Key Details of the Agreement
The official announcement from the Saudi Press Agency confirmed that SABIC will supply two essential raw materials: polybutadiene rubber, a synthetic rubber crucial for tire treads and sidewalls, and carbon black, a reinforcing agent that improves tire durability and performance. This is the first agreement of its kind to supply raw materials specifically for local tire manufacturing within Saudi Arabia. The partnership leverages SABIC’s world-class petrochemical production capabilities and PIF’s strategic investment power alongside Pirelli’s global manufacturing expertise. The project is a direct outcome of coordinated national strategy, aligning the objectives of a leading Saudi company (SABIC), the sovereign wealth fund (PIF), and an international industry leader to establish a new industrial sector within the Kingdom.
Implications and Economic Impact
The establishment of a full-scale tire manufacturing facility has wide-ranging implications for Saudi Arabia’s economy and its position in global supply chains. It creates high-value jobs, transfers advanced technical knowledge, and stimulates the growth of supporting logistics and service industries. For the global automotive sector, it introduces a new, strategically located production hub in the Middle East, potentially serving regional and international markets. The project also strengthens the Kingdom’s export portfolio by adding a sophisticated manufactured product. Furthermore, by anchoring the supply chain with locally sourced raw materials from SABIC, the venture enhances economic circularity and ensures greater control over production costs and quality, contributing to the overall competitiveness of the Saudi industrial sector.
Vision 2030 Alignment
This landmark agreement is a clear and practical manifestation of Saudi Arabia’s Vision 2030 blueprint for economic transformation. It directly advances several core Vision 2030 objectives, including localizing renewable industries and manufacturing, increasing non-oil exports, and attracting foreign direct investment through strategic partnerships. The project exemplifies the successful collaboration between Saudi Arabia’s leading national entities and international firms to build new economic engines. By fostering a complete value chain—from raw material production to finished goods manufacturing—within its borders, the Kingdom is systematically building a more diversified, knowledge-based, and globally integrated economy. This initiative not only strengthens Saudi Arabia’s industrial autonomy but also solidifies its emerging role as a reliable and innovative partner in the global manufacturing landscape, paving the way for future investments and industrial advancements.