With the majority of Saudi Arabia’s major petrochemicals projects under construction, the kingdom’s industrial diversification plans are beginning to take shape.
According to regional projects tracker MEED Projects, Saudi Arabia awarded more than $4bn-worth engineering, procurement and construction (EPC) contracts for industrial projects in 2012.
The figure represents a 38 per cent drop on the $6.47b- worth of projects that were awarded in 2011, but does not take into account the work being carried out at King Abdullah Economic City.
The list of active projects does indicate that the kingdom is remaining focused on its plans to diversify its industry.
Metals and mining projects are prominent on the list, including the Saudi Arabian Mining Company’s (Maaden) aluminium joint venture with the US’ Alcoa at Ras al-Khair in the Eastern province.
The smelter project at Ras al-Khair has already started producing hot metal and the rolling mill is almost complete. In 2012, the next phase of the scheme was initiated when the $1.9bn alumina refinery EPC contract was awarded to South Korea’s Hyundai Engineering & Construction.
In the manufacturing sector, 2012 was also a productive year with key projects being completed and new schemes being awarded.
The Dammam 2nd Industrial City is beginning to build a reputation as a manufacturing hub and now has several high-profile facilities either in operation or under construction.
Japan’s Isuzu Motors is now producing vehicles at its new plant at the site and will ramp up production to 25,000 vehicles a year by 2017.
Also in Dammam, Germany’s Siemens is building a $160m plant that will manufacture gas turbines and compressors aimed at the domestic market. Completion is expected in late 2013. A similar plant operated by the US’ GE is already operational in Dammam.
Jizan Economic City in the south of the kingdom has not witnessed as much industrial project activity as anticipated, but along with a major refinery and steel plant, there is a $450m ilmenite smelter being constructed.
Finland’s Outotec has started work on the scheme for the local Cristal Global. Scheduled to be completed in 2014, the plant will have a capacity of 500,000 tonnes a year (t/y) of titanium dioxide slag, as well as 235,000 t/y of high purity pig iron.
The outlook for the kingdom’s industrial projects sector remains buoyant. According to MEED Projects, there are $5.78bn-worth of schemes at the engineering, design or tender phase. The sector should also see a marked increase in smaller manufacturing conversion projects with budgets of $50m-$200m that will start to appear in line with the completion of the kingdom’s petrochemicals megaprojects.
However, with a question mark now hanging over the $3bn Al-Rajhi Steel project at the King Abdullah Economic City, 2013 could prove to be a leaner year for contractors.