Manama focuses on hub strategy

01 July 2014

Much of Bahrain’s industrial activity stems from the giant Alba venture


In the 1970s, amid growing concerns about its ageing oil fields – the oldest in the GCC – Bahrain became the first country in the region to embark on a diversification programme to develop its non-oil industrial base.

As a result, Bahrain’s economy is today one of the most diversified in the GCC, with the manufacturing sector accounting for almost 15 per cent of GDP. At its centre is Aluminium Bahrain (Alba), the world’s biggest aluminium smelter, which contributes more than 10 per cent of the country’s GDP.

Attracting investment in manufacturing is the key element of Bahrain’s Vision 2030 economic masterplan, which was launched by the government’s Economic Development Board in October 2008.

The plan seeks to establish Bahrain as a regional manufacturing and logistics hub, built around several special investment zones, including Bahrain International Investment Park (BIIP), Bahrain Investment Wharf and Bahrain Logistics Zone, which have been set up close to the new Khalifa bin Salman port at Hidd.

Manama faces challenges, however, in securing energy resources to power further raw material feedstock and electricity supply projects.


To date, some 84 companies have taken space in BIIP, filling 60 per cent of the site and employing 8,400 people, with nearly $1bn in investment. Further investment is planned to develop infrastructure and warehousing at the park.

According to the 2012/13 global free zones ranking, published by Foreign Direct Investment magazine, Bahrain is home to three of the world’s top 20 locations for inward investment, with BIIP ranked 15th, Khalifa bin Salman port placed 16th and Bahrain International airport in 19th place. Bahrain Logistics Zone was ranked 30th. Several development projects are planned for all the zones over the coming years, including an expansion of Bahrain International airport.

Some $6.5bn-worth of industrial projects are planned or under way in Bahrain, representing about 9 per cent of all projects in the kingdom. Of these, about 31 per cent are private sector investments, with the rest being government driven.


Manama is seeking to drive investment in downstream aluminium production by developing a manufacturing hub around the Alba smelter. Alba has been a boon for companies in associated downstream industries. Some 50 per cent of output is supplied to Bahrain’s downstream aluminium industry, which includes firms such as Bahrain Atomisers International and Bahrain Aluminium Extrusion Company.

Alba is planning further expansions, despite growing competition from aluminium smelters around the region. It is considering adding a sixth production train to its site at Sitra that would boost production capacity to 1.2 million tonnes a year (t/y). The project will only go ahead when new gas feedstock supplies can be secured, however.

With growing demand for iron and steel in the Middle East, Kuwait’s United Steel Holding Company (Foulath) and Yamato Kogyo Company of Japan plan to build a steel complex at Hidd. The project will encompass a 1.5 million-t/y direct reduction iron (DRI) unit, a 1.3 million-t/y meltshop and a 1.2 million-t/y rolling mill. The project is expected to increase Bahrain’s export revenues and provide about 1,000 jobs.

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