The deal for five Avante 2200 corvettes warships, for a quote put at around two billion euros ($2.3 billion), will be implemented by a joint venture made up of the Saudi Arabian Military Industries (SAMI) and the Spanish company, the Saudi news agency SPA reported.
Under the deal, operations will start this autumn and will run until 2022 with the delivery of the last vessel.
The agreement has been in the making since April during the European tour of the Crown Prince Mohamed bin Salman.
The future shipyard will generate 6,000 jobs with 1,100 employments over five years.
A coalition of NGOs including Amnesty International had urged Madrid not to go ahead with the deal because the corvettes could be used in Saudi Arabia’s military campaign against Houthi rebels in Yemen, AFP reports.
The kingdom is leading an international coalition in Yemen against the Iran-backed rebels who have seized large swathes of the country and flashed out Saudi Arabia-backed President Mansour Hadi from capital Sanaa.
Saudi Arabia is one of the world’s largest arms importer. However, under the Mohamed bin Salman-led 2030 vision, the kingdom looks with SAMI to produce its military weaponry in view of slashing down its spending and also to generate local employment.