Abu Dhabi expresses confidence in success of polymers park

13 June 2008
Developer of plastic conversion facilities aims to service global markets.

State-owned Abu Dhabi Basic Industries Corporation (Adbic) has insisted that its new polymers park will be able to compete with international rivals, despite its distance from the world’s main consumer markets.

The Abu Dhabi Polymers Park at Abu Dhabi Industrial City was unveiled on 10 June. The scheme, aimed at attracting the private sector to set up plastic conversion facilities, will cover an area of 4.5 square kilometers and require investment of about $4bn.

Industry observers say such plants are usually located close to consumer markets to avoid high transportation costs on what are often low-margin items.

Production at the planned Abu Dhabi park is likely to concentrate on products such as packaging, pipes and cables.

While there is some regional demand for such goods, the majority of customers are likely to be in markets such as the Far East, North America and Europe.

“Traditionally a lot of products have been made close to markets,” says Jim White, chief operating officer at Adbic. “Air is expensive to transport so it would not make sense to make products such as bottles. But there are lots of value-added products that do make sense. Also, there is a growing regional market.

“If you look at all polymer types, approximately half of all polymer commercial applications do make sense to make here in the Gulf, while the other half is better close to consumers.”

White says the park will primarily use resin pellets from Saudi Arabia and Kuwait as raw material, although some will also be sourced from Abu Dhabi Polymers Company (Borouge).

“Further up the Gulf there are vast quantities of polymers coming on stream,” says White.

“This traditionally has been exported to other markets. The product floats past Abu Dhabi on its way to Asia.

“Our ambition is to try and get some of that product to Abu Dhabi and, from here, service the international market.”

Riyadh is also investing in its plastic conversion industry and it is unclear whether Saudi producers can be persuaded to export their products rather than have them converted locally.

“We feel pellets will go where the customers are,” says White.

Adbic is also moving ahead with its steel and aluminium projects, as the emirate has plans to build up Abu Dhabi’s indus-trial base.

Its Emirates Steel Industry subsidiary will use imported iron ore when production begins at its steel plant in the autumn.

The plant will convert ore into 1.6 million tonnes a year (t/y) of raw steel and, from that, into 1.4 million t/y of refined steel. This in turn will be used in two new rolling mills to make final products. Adbic plans to increase capacity to close to 4 million t/y by 2010.

Adbic’s other main venture is the Ruwais aluminium smelter which it is developing in conjunction with the UK’s Rio Tinto.

The project has been delayed by a shortfall in available gas which would be used to provide the necessary power.

Despite the difficulties, the company is hoping to sign a number of downstream joint venture agreements that will increase its presence in the aluminium sector.

“Just like steel and petrochemicals, Adbic is incredibly active trying to build a downstream aluminum sector,” says White. “We’re in several joint venture negotiations and hope to make announcements later this year.”

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