Industry
From The Report: Saudi Arabia 2016
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In recent years an emphasis has been placed on growing the Kingdom’s non-oil private sector by bringing in manufacturing and other industries to diversify the economy. The National Transformation Programme has replaced the Kingdom’s 10th Development Plan and establishes the means by which the country will meet the objectives set out in Vision 2030, whose main goal is to diversify the economy away from oil. With value-added industry and mining set to play substantial roles, importance has been placed on projects that will utilise the Kingdom’s raw material wealth, including petrochemicals, metals and phosphates, and develop a full chain of upstream and downstream opportunities for both local and international firms.
Articles from this Chapter
Evolution and change: The Kingdom is tapping its resources to chart a course for future growth that is less reliant on hydrocarbons
Mining for ideas: With advanced infrastructure already in place, the mining sector is poised for serious expansionOBGplus
Saudi Arabia has put in place ambitious plans to raise the value of its mining operations to reach SR260bn ($69.3bn) by 2030. Currently, the direct and indirect contribution of the sector to the Kingdom’s GDP is estimated to be around SR80bn ($21.3bn), with the sector accounting for 265,000 jobs, according to a speech made by Ali Al Naimi, former minister of petroleum and mineral resources, in October 2015. A Priority Sector The Kingdom has vast mineral resources which, due to the ready supply…
Staying competitive: As the government cuts energy subsidies, businesses see an opportunity to diversify their offeringsOBGplus
Following a decline in global oil prices for more than a year and a half, in December 2015 the Saudi government announced domestic energy prices would rise overnight. On December 29, 2015 the price of petrol rose from SR0.60 ($0.16) per litre to SR0.90 ($0.24) for Octane 95, while 91-grade rose by more than 65%, from SR0.45 ($0.12) to SR0.75 ($0.20). Natural gas prices, meanwhile, increased by 60%, from $0.75 to $1.25 per million British thermal units (Btu), while ethane prices more than doubled,…
Go with the flow: Saudi Arabia is looking both east and west to extend its downstream reachOBGplus
Steps taken by national oil giant Saudi Aramco to consolidate some of its downstream assets, most notably in the US market, appear to be laying the groundwork for an initial public offering (IPO) and a move towards becoming a global refining leader. In mid-March 2016 Royal Dutch Shell’s US affiliate and Saudi Aramco’s downstream subsidiary Saudi Refining announced an end to their partnership and the division of assets of their joint venture (JV) Motiva Enterprises. Downstream Under the agreement,…
Work in progress: Several large-scale infrastructure projects have helped the sector weather a drop in global steel pricesOBGplus
Saudi Arabia’s metals industry is currently going through significant upheaval. While aluminium production has been growing since the first bauxite was successfully mined from the Kingdom’s Al Ba’itha mine in May 2014, steel production has dropped amid declining prices. Nonetheless, with so many large-scale infrastructure projects ongoing in the Kingdom, there should be plenty of opportunities in the near and long term. “Saudi Arabia is a good place to do business if you are involved in…
New horizons: A changing marketplace finds the Kingdom developing more speciality productsOBGplus
Saudi Arabia has long been reliant on the upstream petrochemicals industry, but the Kingdom is accelerating efforts to diversify its economy and has some clear sector-specific industries it is looking to develop. Plastics, fertilisers, mining and metals are particularly attractive, and a strong push is likely to come in the near future in the automotive industry (see analysis). Downstream Of Downstream The most attractive opportunities remain in industries that operate downstream from the…
Driving it home: Creating a homegrown automotive industry is contingent upon the ability to produce raw materials in-countryOBGplus
One sector Saudi Arabia is pushing hard to develop is its domestic automotive industry. The national strategic plan, part of the Ninth Development Plan ( 2010-14), included automotive development as one of the central pillars of Saudi industrial strategy. In fact, the automotive industry is seen as part of a larger industrial project whereby the Kingdom creates whole supply chains rather than just producing the raw materials, shipping them overseas for manufacturing and then buying the finished products. With…
Challenges ahead: A slowdown in construction projects and higher production costs prove short-term hurdles for cement producersOBGplus
Saudi Arabia was the eighth-largest producer of cement in the world in 2014; however, the slowdown of the economy and the energy price hikes of December 2015 have impacted the sector. While major government-led infrastructure projects are still going ahead – though some are delayed and others may be downsized or cancelled at a later date – the Kingdom’s cement sector is under pressure from a combination of the decline in overall infrastructure investment, lower fuel subsidies, increased competition…
Going local: Encouraging growth in the domestic pharmaceutical industry gains strategic importanceOBGplus
With Saudi Arabia’s population now above 30m, and an increasing number of high-end private and public hospitals in the Kingdom, there are strong opportunities in the field of pharmaceuticals, not only for companies looking to import drugs but also for the local production of pharmaceuticals and medical devices, an area the government is eager to develop. Domestic Targets Fostering a strong and localised drug manufacturing sector is increasingly being identified as an area of strategic importance,…
