Suhail Mubarak bin Athaeeth, CEO, Senaat, on developing downstream industries

Suhail Mubarak bin Athaeeth, CEO, Senaat

In the 1970s, the government of Abu Dhabi perceived the importance of diversifying its economy away from hydrocarbons. The vision of the late Sheikh Zayed bin Sultan Al Nahyan, the UAE’s first president, was crystallised when his son, Sheikh Khalifa bin Zayed Al Nahyan, president of the UAE and ruler of Abu Dhabi, set up the pillars of Abu Dhabi Economic Vision 2030.

With unequivocal determination, Abu Dhabi is pushing ahead with its expansion plans in the metals sector. New metals projects due to come on-line in the next few years should make a substantial contribution to Abu Dhabi’s Economic Vision 2030 by creating a complete production and distribution cycle. This contribution will be further enhanced once Khalifa Industrial Zone Abu Dhabi (Kizad) is fully operational. Activities at the industrial zone are expected to account for 15% of Abu Dhabi’s non-oil GDP by 2030.

One special focus is downstream industries. In most global economies, expanding downstream is a profitable business. However, the UAE and the wider GCC have taken a more cautious approach when expanding this part of the metals sector. In the Gulf, the development sequence in the metals and mining industries is somewhat different than in the rest of the world. Here the sequence starts with the production of metals at a competitive cost, then focuses on downstream value-added products, and then, if the resources are there, works upstream to the mine.

Of particular interest in the metals sector is aluminium, one of the fastest emerging pillars of growth outlined in Economic Vision 2030. In June 2013, the UAE merged Emirates Aluminium (EMAL) with its other flagship state aluminium firm, Dubai Aluminium (DUBAL). With an enterprise value of $15bn, the new company, Emirates Global Aluminium, will see its production capacity rise to 2.4m tonnes per annum (tpa) once phase two of EMAL’s expansion is completed in 2014, increasing that entity's annual capacity from 800,000 tpa to 1.3m. This will make Emirates Global Aluminium the world's fifth largest aluminium company by production volume. The new company will be in a better position to compete with others in the region. With metal production thus secured on a large scale and at competitive prices, Abu Dhabi can turn its attention to downstream industries.

In line with Abu Dhabi's development strategy, Kizad has been organised into clusters, each centred on a primary industry. One of these is aluminium, anchored by EMAL’s smelter, which will be the largest in the world. The smelter will provide liquefied aluminium to downstream industries, increasing efficiency and reducing the energy used at downstream factories to liquefy the solid metal they receive.

Kizad’s aluminium cluster is taking shape. In 2013, Cast Aluminium Industries, a midstream aluminium producer and recycler, joined. This company, which specialises in aluminium dross recycling, aims to export an initial 300 twenty-foot equivalent units annually from the adjacent Khalifa Port.

Just as important, several companies in downstream sectors have started opening factories. The Taweelah Aluminium Extrusion Company (TALEX) is the first aluminium downstream project to operate on the “hot metal road”, and is set to receive liquid metal from EMAL. Built on a plot of 200,000 sq metres, it will produce extruded aluminium and related products for regional and international markets.

Another project to benefit from EMAL’s hot metal is Ducab Aluminium, a joint venture between Senaat and Ducab. This new aluminium rod mill will manufacture 50,000 tpa of electrical conductive grade aluminium alloy rods, wires and bare overhead conductors. Commercial production is expected to start in 2016, and the firm has already marked 80-85% of production for export across the GCC, Europe and India.

These two projects are only the beginning of developing a cluster where up-, mid- and downstream activities complement each other. We are confident that these projects will demonstrate their benefits and contribute to Abu Dhabi’s plans for diversification.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Abu Dhabi 2014

Industry & Retail chapter from The Report: Abu Dhabi 2014

Cover of The Report: Abu Dhabi 2014

The Report

This article is from the Industry & Retail chapter of The Report: Abu Dhabi 2014. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart