Industrial Development

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Ras-al-Khaimah's industrial and commercial fabric is continuing to rapidly expand, with the RAK Free Trade Zone (RAK FTZ) playing a strategic role in this development. At the time of its inception in 2000, it hosted just 17 companies. Since then, companies have flocked in and at the latest count, 3,186 companies were established at the RAK FTZ, which altogether had invested over AED4bn ($1.1bn) in the emirate.

Though most companies are active in the commercial sector, light- and medium-industries are also thriving, producing items ranging from cables and other electrical components to construction materials, fire-fighting equipment, cosmetics, perfumes, foodstuffs, furniture, boats and even armored vehicles.

The RAK FTZ is continuing its efforts to attract international investors. Recent visitors have included top-level foreign delegations, such as US Consul General Paul Sutphin, who visited RAK FTZ on June 7, an Iranian delegation on June 13 and New Zealand Consul General Wayne Mikkelsen on June 21.

Although the specific contents of these meetings have not been revealed, a RAK FTZ spokesperson told OBG, "These visits resulted in enhancing relations, as well as initial plans for further cooperation in different aspects, such as education with New Zealand".

Meanwhile, Ras Al Khaimah's heavy industrial sector, which until recently was mainly synonymous with quarrying and cement factories, is also going through rapid change and diversifying into glass and steel production.

Guardian Industries, one of the world's largest manufacturers of float glass and fabricated glass products, is currently setting up a factory in RAK, a $115m investment. The plant is under construction, and production should begin in the course of 2007, with a capacity of 700 tonnes of glass per day, mainly for automotive and construction applications. The production will mostly be directed at the UAE and Gulf Cooperation Council (GCC) countries.

Saudi-based Zamil Steel inaugurated its RAK steel plant in April 2007. The factory, a $46.7m investment, already boasts a production capacity of 40,000 metric tonnes of steel per year, entirely dedicated to pre-engineered steel buildings (PEB), open web steel joists and floor decking products. By the end of 2007, the factory will have an additional capacity of 12,000 tonnes per year, dedicated to the production of steel lattice towers.

Other firms are looking to set up heavy industries in Ras Al Khaimah such as Union Global, a dredging vessels manufacturer which already operates an assembly yard in the neighbouring emirate of Sharjah. It is reportedly investing AED10m ($2.72m) for a new assembly facility in RAK.

However, while RAK's transport infrastructure has vastly improved in recent years - such as with the expansion of the Mina Saqr port or the construction of the Emirates road - some challenges remain. Industrialists rely mainly on truck transportation and are at the mercy of increasing costs and unpredictable traffic jams. Several RAK-based businessmen interviewed by OBG have called for the construction of a railway linking the seven emirates together for faster and more reliable cargo transport.

Energy supply is another source of concern. Energy-intensive activities, such as cement, steel, glass and other heavy industries, are adversely impacted by an insufficient natural gas supply and the issue becomes especially critical in the summer, when demand for gas-generated electricity surges.

"We are going through a tough summer for gas, just as we did last year," Ruurd Abma, the chief operating officer of RAK Gas Commission (Rakgas), told the media.

According to press reports, Rakgas usually imports 40m cubic feet per day (cfd) of gas from Oman, but that figure has dwindled to just 3m cfd, the remainder being rerouted to the Federal Electricity and Water Authority's (FEWA) power plants for distribution in the Northern Emirates.

As a consequence, several cement plants, such as Gulf Cement, have already begun using South African coal. Union Cement, RAK Cement and others, are considering doing the same. Although coal is cheaper than gas, multi-fuel systems represent an investment that can run in the tens of millions of dollars, according to some sources. Reliance on coal also comes at a greater logistical and environmental cost.


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