Industrial diversification continues in the GCC

22 August 2012

Almost $4.9bn-worth of contracts awarded in the first half of 2012

The first half of 2012 has been a busy period across all industrial sectors in the region. According to regional projects tracker MEED Projects, about $4.9bn-worth of projects were awarded in various sectors in the period.

Contract awards are up by 29 per cent up in the first half of 2012, compared with the corresponding period of 2011. Compared with the second half of 2011, it is down 39 per cent.

Four of the six GCC nations awarded industrial contracts, with the vast majority coming from the metals and mining sector. Out of the 11 projects that were awarded in the first half of 2012, six are in Saudi Arabia, two in Oman and the UAE, and one in Qatar.

The highest value contract was awarded at the Saudi Arabian Mining Company (Maaden) and the US’ Alcoa’s $10.8bn complex at Ras al-Khair in the Eastern Province of the kingdom. South Korea’s Hyundai Engineering & Construction won the $1.9bn contract to build an alumina refinery.

Another significant award in the kingdom is the $433m contract given to Finland’s Outotec by Cristal Global for the construction of ilmenite smelting facilities at Jizan Economic City.

Elsewhere in the GCC, Italy’s Danieli Corporation picked up a $500m-plus contract for the third phase of the Shadeed Iron & Steel plant in Oman. Qatar Steel also made a $500-plus award in the steel sector to Austria’s Siemens VAI.

The second half of 2012 also looks promising, with Saudi Arabia’s metals sector poised to make some large contract awards. According to MEED Projects, there are currently $6.7bn of contracts at the front-end engineering & design or main contract tender phase.  

Bids are now in for the $3bn Al-Rajhi Steel complex that is planned for the King Abdullah Economic City near Jeddah. Awards are due to be made on the steel project in the fourth quarter of 2012.

Bahrain’s industrial sector is also beginning to show signs of recovery and the $400m conversion of a stainless steel mill into a rebar mill is set to be awarded during the third quarter.

Both steel and aluminium projects are set to dominate the industrial sector in the short-term, but mid to long-term will see manufacturing industries begin to emerge.

The trend that will follow from the construction of major metal and plastics plants is a large number of conversion industries being rolled out across the GCC.

The value of these projects will be much lower than the multibillion-dollar megaprojects, but the sheer number of them should mean more opportunities for contractors in the region.

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