Abu Dhabi dominates UAE industrial sector in 2012

16 September 2012

Steel and military projects to drive increase in non-hydrocarbon contract awards

Metals and military projects in Abu Dhabi are expected to lead to an uptick in the value of engineering, procurement and construction (EPC) awards in the UAE’s non-hydrocarbon industrial sector this year.

As part of its Economic Vision 2030 strategy, the government of Abu Dhabi is undergoing a push to diversify the industrial sector to decrease reliance on the emirate’s abundant oil and gas reserves. Petrochemicals and metals form the backbone of this strategy, with significant funds being invested in aluminium and steel project expansions.

According to regional project data tracker MEED Projects, the UAE is forecast to award $2.46bn in awards on major contracts this year, an increase of 91 per cent from the $1.29bn spent in 2011.

The EPC market in the UAE has been dominated in the last two years by a single megaproject – the phase two expansion of Emirates Aluminium’s (Emal) smelter.

The extension at the Emal site in Taweelah, half way between Abu Dhabi and Dubai cities, will expand the smelting operations to produce 1.3 million tonnes a year (t/y) of primary aluminium, up from a current capacity of 750,000 t/y. So far this year, Emal has awarded a $30m contract to Rio Tinto Alcan Alesa for the material handling system and a $200m deal on the potlines and reduction area to local/UK group Al-Futtaim Carillion (AFC).

The largest single contract expected to be awarded this year is on the third-phase expansion of Emirates Steel Industries’ (ESI) operations in Mussafah, Abu Dhabi. The estimated $1bn contract is expected to be awarded by the end of the year, according to steel industry sources.

Two industrial food production contracts have also been awarded this year. Brasil Foods Company awarded Amana Contracting & Steel Buildings a $120m deal on a frozen foods processing plant in Abu Dhabi, set for completion in 2013. Meanwhile, Dubai Refreshments Company awarded local contractor System Construct a $109m deal for a soft drink factory at Dubai Investment Park.

Another major contract this year will be the Advanced Military Maintenance Repair and Overhaul Centre (AMMROC) in Al-Ain, Abu Dhabi. Bids are still under evaluation for the facility, with a contract valued about $800m expected to be awarded during the fourth quarter of this year.

Next year, about $2.1bn in contracts are expected to be awarded in the sector, with eight in the mid-range of $100-200m. Mid-sized metals projects include Unifico Copper FZC’s copper and gold processing plant in Ras al-Khaimah, Talex’s aluminium extrusions plant in Taweelah and, potentially an Al-Braik investments-backed silicon metal smelter in Abu Dhabi.

Abu Dhabi has set the goal over generating 64 per cent of GDP from non-oil industries by 2030, up from 44 per cent in 2010.

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