Plans for a second major port in Abu Dhabi have been abandoned due to a lack of demand, with only one new port now going ahead.

Abu Dhabi will focus on developing Khalifa port, which is located at Taweelah close to the border with Dubai. The industrial area at Mussafah, which was also due to gain a port, will now be linked by rail to Khalifa port.

It follows recent criticism from leading shipping operators that port owners are focusing too much on expansion, rather than increasing efficiency at their existing ports (MEED 1:2:08).

“The logistical plans show it will be better to develop one port and link them,” says Jaber al-Khaili, chief executive officer of Abu Dhabi’s Higher Corporation for Specialised Economic Zones (Zonescorp), which was behind the port at Mussafah. “There was no sense in building two ports at the same time.”

The bulk handling port at Mussafah was intended to handle 5-9 million tonnes of bulk cargo a year, and included facilities for handling container cargo.

The construction work, which is estimated to cost AED1.5-2.5bn ($407-680m), would have involved dredging a 16 metre-deep channel and completion was expected in 2009. It was to be in Zonescorp’s Industrial City of Abu Dhabi (ICAD) 3.

However, concerns over a lack of demand for a port of this size have resulted in the project being cancelled. “Cost was not the issue,” says Al-Khaili. “The issue was that there is not enough demand for two major ports in Abu Dhabi.”

The Netherlands’ Royal Haskoning carried out the feasibility and scoping study for the Mussafah port (MEED 4:8:06).

Some sea access will still be provided at Mussafah, using private jetties and small landing areas, according to Al-Khaili.

The Khalifa Port & Industrial Zone is being developed by the Abu Dhabi Ports Company. Construction is expected to be completed in late 2010, and total project costs are estimated to be about $10bn.

Phase 1 of the port is anticipated to have an annual throughput of 2 million containers and more than 6 million tonnes of general cargo.

Critically, the site is near the $5bn aluminium smelter being developed at Taweelah by Emirates Aluminium (Emal). When the first phase of the smelter is completed in 2010, it will need to import 1.4 million tonnes of alumina feedstock a year.

Completion of the smelter’s second phase will take aluminium production to 1.4 million t/y, requiring annual alumina imports of nearly 3 million t/y.

Despite the axing of the port project, the development of Zonescorp’s Industrial City of Abu Dhabi (ICAD) complex at Mussafah is taking shape.

The area, a key part of Abu Dhabi’s initiative to boost its industrial base, is being developed in phases, with the con-struction of the infrastructure and utilities for ICAD 3 set to be finished by the end of 2008. The local Al-Jaber Group is carrying out the work.

Demand for land in ICAD 3 is high, according to Zonescorp, and more than 30 per cent has been allocated to oil and gas companies.

“Demand for space is higher than the land available,” says Khaili. “Oil and gas companies are heavily interested and we are looking to host more of these firms.”

Zonescorp is planning to develop a dedicated zone, known as Energy Capital, aimed at oil and gas companies.

The detailed masterplan for ICAD 4 is due to be completed in six months and the tender for the main infrastructure construction contract for the area should be issued in August.

ICAD 4 will consist of a series of specialised industry clusters covering 26 square kilometres. It will be the biggest of Zonescorp’s industrial zones so far. Malaysia’s Jurong is providing consultancy services for the development of the ICAD 4 masterplan.

The number of ports in the region able to handle at least 1 million 20-foot equivalent container units (TEUs) is set to increase from six to 14 by 2010. This has sparked concerns of developing overcapacity in the shipping industry.

Speaking at the MEED Ports Development conference in Jan-uary, Poul Woodall, Gulf operations manager for Danish shipping giant Maersk, warned that the region was facing severe overcapacity from the proliferation of port projects.

However, in 2007, Dubai’s port at Jebel Ali was operating at maximum capacity for much of the year, with a total through-put of 10.7 million TEUs (MEED 01:02:08).

Further expansion at Jebel Ali is still being planned, which could draw potential custom away from ports in Abu Dhabi.

DP World, which is developing Jebel Ali, will also manage Khalifa port through a joint venture with Abu Dhabi Ports Company.