Billions of dirhams are being pumped into developing the petrochemical industry in the UAE to cut dependence on imports and ensure domestic value-addition.
One of the key players in the movement is Abu Dhabi Basic Industries Corporation (Adbic), a government-owned company next month will launch the country's first industrial zone dedicated exclusively to plastics conversion. The Abu Dhabi Polymers Park project will be the emirate's first industrial cluster. More than 50 plastics converting plants will produce value-added goods from raw materials available in the emirate. "The project is expected to attract more than $4 billion (Dh14.7bn) of investment in addition to the infrastructure costs met by the corporation and the government," said Abdullah Saeed Al Darmaki, vice-president for Petrochemicals at Adbic. "We will launch the project on May 21. The allocation of plots to investors will take place in June."
The industrial park will convert more than one million tonnes of raw plastic annually to produce value-added goods such as plastic bottles, pipes, bags and containers. It will be built on 4.5 sq km of land at the Industrial City of Abu Dhabi III (Icad3) in Mussafah.
Al Darmaki said the land acquired for the park amounted to 40 per cent of the entire area of Icad3.
All the infrastructure and other facilities, including a logistics centre, business park and technical centre, will be completed by the end of 2009 with Adbic and government investment of more than Dh1bn.
"The business park itself will be built at a cost of Dh800 million, the infrastructure such as roads and utilities will cost more than Dh200m and the technical centre will cost Dh123m.
"By 2011 around 80 per cent of the converting units will be operational and by 2012 the park will be 100 per cent operational.
"The precise cost of the logistics centre cannot yet be determined as its size and services will depend on clients' requirements. We will build warehouses for investors who may not want to have their own premises."
Al Darmaki said the petrochemical production capacity in the GCC region was doubling, which made this the right time to invest in such a project.
"This capacity increase will come on line next year so we decided to create a downstream industry which will in turn take petrochemical products and add value before they get out to the world market. Sixty per cent of the park's output will be exported." Al Darmaki said work on the prestigious project began early last year with an extensive benchmarking exercise that involved visiting industrial parks around the world.
"We listed all the best practices that we saw at these parks and presented a report to the government that asked if we should consider building an industrial park catering to the petrochemical industry," he said.
Al Darmaki said Adbic, which is part of the General Holding Corporation, would provide services and
infrastructure to attract petrochemical converters to Abu Dhabi.
He continued: "Investors will come to Abu Dhabi for various reasons such as access to raw materials, proximity to suppliers, competitive utility rates, cheap labour and zero tax at the zone. "In addition the time needed to set up an organisation has been cut from six months to less than 30 days by the one-stop shop service offered by the Higher Corporation for Specialised Economic Zones."
Al Darmaki said the park would avoid unnecessary losses incurred by exporting petrochemical raw materials and buying them back in the form of value-added products and paying taxes and shipment costs.
He said most products converted from raw materials that originated in Abu Dhabi were exported to world markets from China and other Asian countries.
"We are in an ideal location to export such products – the European and African markets are closer to the UAE than they are to Asia. Therefore we need to develop our petrochemical industry so we have a greater share in the world market."
Al Darmaki said locally produced value-added products did not reach international markets – in particular Europe – due to a lack of certification and quality assurance. He said: "The technical centre in the park is a very important element to support our exports to the international market. It will be the first of its kind in the GCC. The need for the centre is shown by the fact that when we buy a kilogram of T-shirt bags from a local plastic converter it costs Dh4.5. That same kilo in Germany costs 3.8 euro (Dh79). The plastic converters here have no access to those markets due to a lack of quality and standard certification."
Al Darmaki revealed that Adbic had set up a joint venture with Low and Bonar of Belgium to build a $25m (Dh92m) polymer plant at the park.
The unit will produce artificial grass and other products used in landscaping and at sports facilities.
The project will be Low and Bonar's first regional plant and will be operational by the end of 2009 with an initial production capacity of approximately 17,000 to 20,000 tonnes. Adbic will have a 59 per cent stake.
Al Darmaki said: "The production capacity will be increased through expansion as demand in the local and international markets grows.
"There will be more joint venture opportunities for investors from abroad."
He added that another project under consideration involved setting up a similar park for metal conversion.
"We are studying the possibility of establishing a metal park where local and foreign investors would set up plants to convert raw metal materials from local suppliers into value-added products. This is another area that we lack.
"We have the raw materials to produce goods that at present we import. This park will be another leader in the country's cluster economy."
Adbic is one of the leading steel manufacturing companies of the country through its ownership of Emirates Steel Industries in Mussafah.
The plant is being expanded with an investment of Dh3.67bn to raise its current two million tonne capacity to five million.
Dh14.7bn: Projected investment in plastics conversion park, excluding infrastructure
Dh1bn: Infrastructure and logistic costs
2012: The year when the park will become 100 per cent operational