Backers review Sabayek options

28 June 2002

Investors and government officials hope to re-open Jubail-based Gulf Ferro Alloys Company (Sabayek),which ceased operating because of financial problems in 2001, Abdulla al-Abdulla, general manager of Qatar Industrial Manufacturing Company (Qimco), which has a stake in the firm, said in an interview on 18 June.

Al-Abdulla also said that the capital of Qatar Clay Bricks Company (QCBC) was to be restructured to reduce the debt service burden, and that work is progressing on two major chemical projects in which Qimco has invested.

Al-Abdulla said that Sabayek, which was opened in 1997 with the capacity to produce 85,000 tonnes a year (t/y) of ferro alloy products, was adversely affected by the sharp rise in Saudi electricity prices in the spring of 2000. This problem was compounded by a sharp fall in ferro alloy prices.

A committee has been formed comprising shareholders, bankers and representatives of the Saudi Arabian Ministry of Industry & Electricity to review Sabayek's prospects. A study into how to get the company operating again has been completed. 'We are optimistic about finding some solution,' Al-Abdulla said. Bahrain-based United Gulf Industries Company (UGIC)is the largest shareholder in Sabayek, with 26 per cent of its equity. Qimco and Kuwait-based Gulf Investment Corporation (GIC)have 10 per cent each.

Al-Abdullah said that Qimco is negotiating with Qatar Industrial Development Bank (QIDB)about the future of QCBC, opened in 1997 with capacity to produce 10 million bricks and 3 million roof tiles a year. He said QIDB may provide a concessionary loan or take an equity stake in the Salwa-based firm. 'This company is functioning and will operate profitably once the debt service issue is addressed,' Al-Abdulla said. Qimco has a 39 per cent stake in the firm.

Al-Abdulla said that the 10,000-t/y Q-Acidssulphuric acid manufacturing firm is in pre-operations and will start full production soon. Qimco has a 100 per cent stake in the company. Work has also started on the Qatar Urea Formaldehyde Companyand production is expected in 14 months. Qimco has a 15 per cent stake in the firm (MEED 27:7:01).

Qimco reported a 9.5 per cent rise in net profit to a record QR 24.4 million ($6.7 million) in 2001. 'We expect profits to rise by about 15 per cent this year,' Al-Abdulla said. Plans include the possibility of doubling the capacity of the 60,000-t/y Qatari-Saudi Gypsum Industries Company. Qimcohas a 33.4 per cent stake in the firm. A doubling of the capacity of Qatar Nitrogen Companyis also possible. This is a 50:50 joint venture with Qatar Petroleum (QP).

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