Industrial projects gain traction across region

31 December 2020
The pipeline of manufacturing schemes in the Middle East and North Africa is expanding in line with economic diversification goals

This package also includes:

Water security trends upwards in region
Renewables to underpin power sector recovery
Challenging outlook for GCC construction

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Industrial projects activity is steadily gaining traction in the Middle East and North Africa (Mena) region as capital expenditures evolve in line with government diversification mandates.

The Mena region has 115 industrial projects with a contract value of $17.2bn under execution. Of these, 79 of the projects, with a total value of $7.8bn, are in the GCC.

The largest ongoing industrial project in the Mena region is the Torbat direct reduction iron plant in Iran. Pre-construction work on the project was under way in 2011, but the $1.8bn contract was repeatedly delayed until October 2020, when construction was understood to have commenced on the scheme. Italy’s Danieli is providing main contracting, instrumentation and technology for the plant, according to regional projects tracker MEED Projects.

GCC market

Yamama Saudi Cement Company’s production plant in Riyadh is the largest ongoing industrial project in the GCC. The contract is valued at $900m, with Metallurgical Corporation of China providing civil and mechanical, electrical and instrumentation works for the scheme. In 2017, financiers National Commercial Bank and Samba Financial Group increased the project’s credit facility from $266.6m to $960m. With a production capacity of 20,000 tonnes-a-day, the plant should begin operating by early 2021.

Collectively, Mena countries have 181 industrial projects in the pre-execution pipeline, with a net value of $55.4bn. About 75 per cent (136) of these projects, however, are at the study stage, indicating that contract tenders and awards for the majority of these schemes may not be confirmed in the near term.

East Hope

The two largest projects in the Mena region’s pre-execution pipeline are facilities for the production of non-ferrous metals ($5bn) and aluminium ($3bn), planned by China’s East Hope Group at the Khalifa Industrial Zone Abu Dhabi (Kizad) freezone. 

The facilities are part of a $10bn scheme by East Hope to develop industrial infrastructure within the UAE and wider Gulf under the umbrella of China’s Belt and Road Initiative. The alumina and non-ferrous metal processing facilities respectively make up the first and third phases of the project. The second phase includes a recycling project for red mud and an alumina waste product along the research centre, with a net value of $2bn.

Projects within the East Hope scheme make up three of the five largest pre-execution industrial schemes in the Mena region. The other two projects are located in Egypt, one of which is a $2.3bn vertically integrated solar factory by the Defence Ministry. According to MEED Projects, plans for the solar plant include the construction of a poly silicon plant and chip mill ($750m each), a power plant ($400m), a silicon plant ($200m), a cells plant ($150m), a glass factory ($80m) and a plastic factory ($20m).

The solar factory is under study, as is Egypt Kuwait Holding’s wood factory in the Minia governorate. With a net contract value of $1.6bn, the project is envisioned to include a factory building, office buildings and production and packaging units. It is expected to be completed in 2024, according to MEED Projects.

GCC pipeline

Of the 181 pre-execution industrial projects in the Mena region, 105 are GCC-based schemes, once again reflecting regional governments’ efforts to stimulate public and private sector investment in their non-oil industrial base. 

With 40 projects worth a combined $9.4bn, Saudi Arabia has the largest of the Mena region’s pre-execution industrial projects in terms of volume. The kingdom’s biggest industrial scheme under study is an air separation unit that the US’ Air Products & Chemicals is developing as part of the world-scale ammonia plant project at Neom. The unit has a net value of $1.5bn, and is expected to be tendered in the second half of 2021, according to MEED Projects.

Also at the pre-execution stage in Saudi Arabia is Gulf Tubing Company’s manufacturing plant in the Eastern Province. Front-end engineering and design (feed) work is under way for the project, and its main contract should be tendered by early 2021, with its award likely in the first half of 2021. 

The project’s scope is set to include the construction of a piping plant and a melt shop with a capacity of 600,000 tonnes a year (t/y); the installation of a tube rolling mill of 400,000 t/y and forged flanges and valves of 200,000 t/y; and the laying of seamless tubes and pipes.

Oman emergence

After Saudi Arabia, Oman has the highest number of pre-execution industrial projects in the Mena region. The sultanate’s 34 industrial schemes in pre-execution have a net value of $8.1bn. Sohar Aluminium Company’s smelter expansion scheme is the largest of these projects.

The contract’s scope includes the construction of a carbon anode plant, metal casting and storage facilities, a gas treatment centre and a power station, as well as the installation of pot-tending machines and an anode bake furnace. With a net project value of $1.2bn, the project is expected to be tendered in the second half of 2021 and awarded in early 2022.

Also at the pre-tender stage in Oman is a calciner plant in Batinah by Sohar Calciner, a joint venture between Saudi Arabia’s Acwa Power and Germany’s MMEC Mannesmann. The project will be developed in two phases, with the first to have a combined plant capacity (cpc) of 450,000 t/y and the latter to have a cpc of 900,000 t/y. Feed work should be completed by early 2021, with the main contract expected to be issued in the first quarter of the year.

Duqm cement

At a more advanced stage in Oman is  Duqm Cement Projects International’s integrated cement plant in Duqm. The $435m project includes the construction of a factory with a capacity of 10,000 tonnes a day, a grinding unit, a clinker unit, a warehouse and processing units. MEED understands the construction contract will be confirmed during the first quarter of 2021, with groundbreaking expected in the same period.

While much of the Mena region’s industrial projects are focused on sectors such as metals, investments are also being made in relatively new industries such as food, recycling and pharmaceuticals. In addition to the $2bn East Hope recycling scheme at Kizad, the region’s pre-execution pipeline includes a $300m integrated waste management plant in Egypt and a $100m solid waste plant in Lebanon, both of which are under study.

Pharmaceutical sector

Pharmaceuticals is another sector that could create opportunities for regional contractors, with seven schemes worth $1.4bn in pre-execution. The largest of these is a $1bn insulin plant planned by Egypt’s HoldiPharma. There is also a $250m vaccine production plant planned by the UAE’s Almas International in Saudi Arabia. Both projects are under study.

More vaccine production plants are expected to follow. The CEO of Egypt’s Pharco Corporation, Sherine Helmy, said in November 2020 that the firm was “working on finding more than one alternative for [Covid-19] vaccines in Egypt”. 

Local media reported Pharco would locally manufacture the vaccine and export it to Africa, where agreements are in place with Burundi, Mali, Tanzania and Nigeria to establish pharmaceutical plants. 

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