Kuwait fails to diversify economy

01 July 2014

Political wrangling has hampered much-needed industrial expansion


Kuwait is notable for its lack of non-oil industries compared with its fellow GCC members, with industrial output paling in comparison with even less-populated Bahrain, Qatar and Oman.

While Kuwait is a significant world-scale oil producer and exporter, it has a much smaller gas output relative to other major oil exporters, limiting the amount of fuel and feedstock it can assign to energy-intensive industries.

Kuwait’s diversification from crude exports has mostly focused on large-scale petrochemicals plants producing polyolefins and nitrogen-based fertilisers.

Diversification has been a long-term issue for the economy, which is heavily exposed to oil exports, but the government has been unsuccessful in pushing through several major projects that have been announced over the past decade.

Political disputes in parliament have hindered Kuwait in drawing up a cohesive plan for industrial expansion, which is needed to create more jobs for locals as the population expands. 


Kuwait’s only significant metals producer is United Steel Industrial Company (KWTSteel), which was established by Kuwaiti investors in 1996.

Over the following four years, it worked with Austria’s Voest Alpine to construct a rolling mill with the capacity to produce 650,000 tonnes a year (t/y) of reinforcing steel bars.

In 2007, KWTSteel awarded Italy’s Danieli the contract to build a melt shop at the Shuaiba industrial area, with the capacity to produce 1 million t/y of steel billets. The melt shop, which includes an electric arc furnace and a ladle furnace, was commissioned in September 2010.

Kuwait also has a cement production capacity of about 6.4 million t/y, making it a similar-sized producer to Oman and Qatar, according to Kuwait’s Global Investment House.

Cement production began when Kuwait Cement Company (KCC) was established with a capacity of 300,000 t/y in 1972. The firm has developed its operations ever since, with the latest expansion completed in 2009.

The company’s licensed design production capacity is 3.8 million t/y, while the operating capacity has reached more than 5 million t/y.

KCC is now commissioning a new stage of expansion to add another 200,000 t/y of capacity to its plant, which is also located at Shuaiba, south of Kuwait City.


The pipeline for significant non-oil industrial projects in Kuwait is almost empty. According to regional projects tracking database MEED Projects, only $565m has been spent on engineering, procurement and construction of new projects since 2007.

Most of this went towards the construction of KWTSteel’s melt shop and KCC’s latest cement production expansion, signifying a very quiet market for potential new entrants.

Some major projects mooted over the past decades have been cancelled or put on hold. These include the local Kanoos Group’s plan to build a steel plant, which was shelved in 2011, and Kuwait Industries Company’s $1bn alumina refinery project at Bubiyan Island, which was put on hold at the pre-feasibility study stage.

One project that appears to be going ahead is a cable manufacturing plant planned by the local Aslaa General Trading & Contracting.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications