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Manufacturing the Future...

GCG Research

GCC Industry Report

January 2008

Gulf Capital Group (DIFC) Limited

Dubai International Financial Center

Registered Office – Offices 5 & 6, Level 4, Precinct Building 3,

P O Box – 214851, Dubai, UAE

Tel: +971 4 363 5730 Telefax: +971 4 363 5739

Website: www.gulfcapitalgroup.com

Email: [email protected]

GCG is regulated by the Dubai Financial Services Authority

INTRODUCTION...........................................................................................................................1

A building here, a building there .......................................................................................................... 1

Chemicals & Plastics – Being smart about oil ..................................................................................... 1

Market Dynamics................................................................................................................................... 2

Future Projects ...................................................................................................................................... 2

ALUMINUM ...................................................................................................................................3

Production Shift..................................................................................................................................... 4

Aluminum Facts .................................................................................................................................... 5

Aluminum in the GCC........................................................................................................................... 6

Raw Material Procurement............................................................................................................................8

Popularity of Extruded Products ...................................................................................................................8

GCC Aluminum Projects................................................................................................................................9

United Arab Emirates...................................................................................................................................11

Bahrain .........................................................................................................................................................14

Qatar .............................................................................................................................................................16

Oman.............................................................................................................................................................18

Kuwait ...........................................................................................................................................................20

STEEL ...........................................................................................................................................24

The History of Steel ............................................................................................................................. 24

Global Production ............................................................................................................................... 26

Steel in the GCC .................................................................................................................................. 28

Reinforcement Bars- Strong Demand .........................................................................................................29


Bahrain .........................................................................................................................................................34

Qatar .............................................................................................................................................................36

Kuwait ...........................................................................................................................................................39

Saudi Arabia .................................................................................................................................................41

CEMENT.......................................................................................................................................44

Cement Facts ....................................................................................................................................... 44

Global Cement Production.................................................................................................................. 46

Cement in the GCC.............................................................................................................................. 47

GCC Cement Projects...................................................................................................................................47


Bahrain .........................................................................................................................................................53

TABLE OF CONTENTS

Qatar .............................................................................................................................................................55

Oman.............................................................................................................................................................57

Kuwait ...........................................................................................................................................................59

Saudi Arabia .................................................................................................................................................60

CHEMICALS AND PLASTICS...................................................................................................64

Chemicals and Plastics in the GCC .................................................................................................... 65


Bahrain .........................................................................................................................................................73

Qatar .............................................................................................................................................................75

Oman.............................................................................................................................................................79

Kuwait ...........................................................................................................................................................82

Saudi Arabia .................................................................................................................................................85

APPENDIX A – KEY COMPANY OVERVIEWS.......................................................................88

Aluminum ............................................................................................................................................ 88

Steel ...................................................................................................................................................... 94

Cement ............................................................................................................................................... 110

Chemicals and Plastics...................................................................................................................... 118

January, 2008

GCC Industry Report 1

INTRODUCTION

Rampant construction activity and cheap energy are the factors driving industrial

growth in the GCC. Oil revenues have enabled GCC countries to diversify their

economies and strengthen their positions in a variety of sectors. The Industrial sector

is one of the integral areas of diversification and this includes the aluminum, steel,

cement, chemicals and plastics industries among others. As a result of ongoing

regional construction activity, major construction materials such as aluminum, steel

and cement are highly sought after in the GCC markets. Due to abundant oil and gas

reserves the GCC states are also producing a variety of chemicals and plastics

products.

A building here, a building there

The current and expected future capacities of the main construction materials

aluminum, steel and cement highlight the pace of construction activity in the region.

Exhibit 0.1 displays the current and future capacities for industries in the region.

1.7

14.7

57.6

6.1

44.9

80.8

Aluminum Steel Cement

Actual Expected

The final capacities for these industries will be realized by 2012.

Chemicals & Plastics – Being smart about oil

Companies in the GCC which were traditionally involved only in upstream oil and

gas activities are increasingly becoming involved in the production of plastics and

chemicals which rely on oil and gas as inputs in their production. One example of

this is the Abu Dhabi Oil Refining Company (TAKREER). The company owns 2 oil

refineries in Abu Dhabi and is now expanding into the downstream sector. GCC

chemicals capacity is set to increase from a current 62 million tons per year to 111

tons per year by 2012.

Exhibit 0.1: GCC Current and Future Capacities (Million tons)

Source: Zawya, Company Websites, GCG Analysis

Local industries are

aiming to quench the

demand in the GCC

for construction

materials

January, 2008


Market Dynamics

Each industry is uniquely positioned and the market supply and demand varies from

industry to industry, from place to place. For example, suppliers can specialize in

either upstream production or downstream activities. The former involving those

processes that lay the foundation for the industry and the latter involving those

processes that result in end-user products. For example, in the aluminum industry,

only two GCC states have primary producing companies while in the cement and

steel industries, markets are highly fragmented with many primary producers.

Future Projects

Suppliers are keeping up with the pace of rising demand in the GCC by planning

projects in virtually all industries. Exhibit 0.2 displays the number of projects

planned for each industry.

42

15

119

Chemicals&Plastics Steel Cement Aluminum

Exhibit 0.2: GCC Future Planned Industrial Projects

Source: Zawya, Company Websites, GCG Analysis

Note: The Chemicals & Plastics bar includes the highest capacity projects in each GCC

country. Total projects are 114.

Industrial projects are

springing up all over

the GCC and

chemicals and plastics

projects exceed the

rest in numbers

January, 2008


ALUMINUM

Aluminum has emerged as one of the most important metals to be used in the

twenty-first century. Its attractive characteristics — light, strong, anti-corrosive,

highly conductive, malleable, and recyclable — have made it perfectly suitable for a

remarkable number of applications.

While it is the third most abundant element in the earth’s crust, its use in

manufacturing and construction activities has arrived surprisingly late on the scene.

This is partially due to the sophisticated technological process needed to isolate the

metal from the various oxides in which it is naturally found. Also, iron and steel have

emerged as the building materials of choice since the days of the Industrial

Revolution. Various global advancements have spurred the development and use of

aluminum to date; from the early military build up of the previous century to the

recent emergence of China’s insatiable appetite.

Exhibit 1.1 depicts the global demand for the commodity along with significant

developments affecting it.

Clearly, there has been significant growth in the demand for aluminum over the last

century. Primary production increased from a negligible amount in 1900 to over 30

million tons in the last few years.1 Aluminum is a significant input in the production

of many manufacturing and consumer goods.

1 International Aluminum Institute (IAI)

Exhibit 1.1: Global Aluminum Production Timeline

Source: IAI, Alcan, GCG Analysis

0

5

10

15

20

25

30

35

19

00

19

10

19

20

19

30

19

40

19

50

19

60

19

70

19

80

19

90

20

00

Wo

rld

Pri

ma

ry P

rod

uc

tio

n (

Mt)

.

MilitaryBuild-up

BuildingApplications

BeverageCans

OilCrises

Automobiles

China

0

5

10

15

20

25

30

35

19

00

19

10

19

20

19

30

19

40

19

50

19

60

19

70

19

80

19

90

20

00

Wo

rld

Pri

ma

ry P

rod

uc

tio

n (

Mt)

.

MilitaryBuild-up

BuildingApplications

BeverageCans

OilCrises

Automobiles

China

In recent times,

aluminum production

has been steadily

rising

January, 2008


There are few other materials with as many diverse uses as aluminum, and because

of this reason its demand has managed to avoid significant ebbs and flows associated

with underlying business cycle fluctuations. The only sustained slowdown the

aluminum industry experienced was during the 1970’s and 1980’s when the global

energy crises created complications. The 1970’s oil crisis came about when the

Organization of Petroleum Exporting Countries (OPEC) decided to cut back on

exports to certain western countries and also raise the price of oil. As a result, a rise

in inflation and unemployment ensued. The 1980’s energy crisis came about when

political conflicts in Iran caused production there to almost stop, reducing the supply

of oil in the global market and thus raising the price.

Production Shift

As is the case with most commodities these days, emerging markets – China in

particular, are fuelling the growth in global demand for aluminum. With its near 1.3

billion people and a Gross Domestic Product (GDP) growing at 10% annually2,

China is developing a voracious appetite for raw materials and metals.

Exhibit 1.2 depicts the production shift for the commodity and a breakdown of the

absolute contribution of each region.

2 International Monetary Fund, World Economic Outlook Database, October 2007

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Over the past six years, China has represented

65% of the net increase in primary production

North America

Latin America

W. Europe

Asia

Oceania

Africa

CIS and

E/C Europe

China

W

e

s

t

e

r

n

W

o

r

l

d

E

a

s

t

B

l

o

c

ktpa

Exhibit 1.2: Aluminum Production – Regional Breakdown 1996-2006

Source: IAI, Alcan, GCG Analysis

Since 2002, China’s

aluminum production

has been picking up

January, 2008


Increased production in China has been the story over the last decade; Chinese

production is responsible for over half of the increase in global production since

1996. Generally speaking, a trend of production shifting from the West to the East

has emerged. In fact, not only has Eastern production increased but Western

production has simultaneously decreased. The net result underscores the production

redistribution trend.

Aluminum Facts

Aluminum can be produced via scrap metal (recycled aluminum) or via primary

production using bauxite. Regardless of the process used, molten aluminum is cast

into ingots which are then used in the production of extruded and rolled products.

Extruded products are used in the making of prefabricated buildings, window and

door frame systems, curtain walling and a variety of facades. Rolled products include

foil, sheet and plate which are used packaging, transportation, electrical and

household applications.

Exhibit 1.3 displays the value chain for aluminum.

Exhibit 1.3: Aluminum Products Value Chain

Source: The Aluminum Association, European Aluminum Association, GCG Analysis

Primary Aluminum

Slabs, Billets

Extruded Products Rolled Products

Fabricated Products

Powder and Paste

Aluminum products

are used in every

industry imaginable

January, 2008


Aluminum in the GCC

While most of the GCC countries are currently planning major aluminum projects,

only the United Arab Emirates and Bahrain are presently producing primary

aluminum. The two primary aluminum smelting companies in the region are United

Arab Emirates’ DUBAL and Bahrain’s ALBA and together they are presently

producing over 1.7 million tons3 of aluminum representing the entire region’s

primary aluminum production. However, a number of projects on the horizon will

change the landscape of the industry into a much more fragmented one than it

currently is.

Exhibit 1.4 displays the current aluminum capacity in the region and the capacity

once all future projects are complete.

Similar to the trend occurring in China, aluminum production is shifting to GCC

countries. There are two primary reasons why the GCC, in particular, is an attractive

environment for aluminum production facilities, namely:

1) Comparative Advantage – Energy: The GCC region has substantial oil and

gas reserves. Given that aluminum smelting is an energy intensive process

(one quarter to one third of production cost)4, the region has a natural

advantage that has begun to be profitably exploited by both local and

international players.

3 Company Websites

4 The Aluminium Association, 2004

Exhibit 1.4: GCC Annual Aluminum Production (Million tons)

Source: Company Websites, Zawya, GCG Analysis

Oman, Qatar and

KSA member states

are all planning a

smelting complex

1.7

2006A

6.1

2012E

UAE

Oman

Saudi Arabia

Bahrain

Qatar

1.2

0.86

3

0.87

0.18

0.51

1.5

GCC Total

Current Future

0.12

Kuwait

January, 2008


Exhibit 1.5 displays a breakdown of aluminum smelting costs.

Raw Materials

50%

Energy

30%

Other

20%

2) Proximity to Key Markets: The petrodollar influx of the last few years has

fuelled substantial economic and infrastructure development. The resulting

increase in domestic demand, coupled with the region’s proximity to

Europe and the Subcontinent, which serve as key export markets,

has proven to create juicy opportunities for smelter operations in this

region.

Exhibit 1.6 displays the key global markets in proximity to the GCC.

Exhibit 1.6: Key Markets in Proximity to the GCC

Source: GCG Analysis

GCC

Africa

India

China

Europe

Russia

SE Asia

Exhibit 1.5: Aluminum Production Costs – Global Average

Source: Industry Sources, GCG Analysis

The GCC has a

significant cost

advantage when it

comes to one of the

primary cost

components – energy.

The GCC has a prime

location in relation to

lucrative export

markets

January, 2008


Raw Material Procurement

Since aluminum is extremely reactive, it is not found in its original form but as one

of a selection of around 250 minerals. Hence, one challenge that exists for upstream

aluminum producers in the GCC is the limited access to the chief raw material and

principle ore involved in the production of aluminum – bauxite. To this end, GCC

states have forged alliances and developed units abroad to maintain a sufficient

supply of the raw material.

Popularity of Extruded Products

Aluminum is highly suited to the extrusion process due to its malleability

characteristics at high temperatures and thus it can be cast, rolled or extruded into an

infinite variety of shapes. The term ‘extrusion’ is used interchangeably to refer to

both the end-products and the process by which the products are created. The

construction industry has a high requirement for aluminum extrusions or customized

aluminum profiles. Given the fact that construction is a rampant activity in the GCC,

companies have sprung up to quench the demand in the region for extruded

aluminum products.

January, 2008


GCC Aluminum Projects

Given the advantages of establishing smelting operations in the GCC it is

understandable that each of the member states that do not currently have smelting

operations, except Kuwait, has begun planning for its respective aluminum industry.

Exhibit 1.7 displays the total number of projects in the GCC. The graph shows the

total number of projects for each country and the share of each country in the total

project pie.

9

1

2

3

4

Qatar Oman Saudi Arabia UAE Total

33%

11%

11%

44%

The previous graph shows that several projects are underway in the GCC region,

with Saudi Arabia, Qatar and Oman establishing aluminum production operations for

the first time. Exhibit 1.8 displays the current scenario of aluminum projects in the

GCC with greater detail.

Name Yearly Capacity (tons) Completion Date Country

DIC Aluminum Glass Factory N/A 2007 UAE

Sohar Aluminum Company Smelter 330,000 2008 Oman

Emirates Aluminum Smelter (EMAL) 1.4 million 2010 UAE

Nova Aluminum Processing Plant 135,000 2010 UAE

Jizan Aluminum Complex 700,000 2010 KSA

Al Ahsa - Jubail Aluminum Chip Manufacturing 45,000 2010 KSA

Qatalum Aluminum Smelter 585,000 2010 Qatar

Ruwais Aluminum Smelter 550,000 2011 UAE

Garmco Aluminum Rolling Mill 160,000 2011 Oman

Maaden Integrated Aluminum Complex 720,000 2012 KSA

In addition to having the most number of planned projects, the UAE and Saudi

Arabia also have the highest number of downstream aluminum companies.

Exhibit 1.9 displays the total number of companies in each country and the share of

each country in the total pie.

Exhibit 1.8: GCC Aluminum Project Details

Source: Zawya, GCG Analysis

Exhibit 1.7: GCC Aluminum Smelter Projects – Regional Breakdown


The UAE and Saudi

Arabia are planning

the maximum number

of smelting projects

The UAE, KSA and

Qatar are planning

projects with the

highest capacities in

the GCC

January, 2008


41

13

5

7

11

14

Oman Qatar Kuwait Bahrain UAE Saudi

Arabia

Total

7%

2%12%

17%

27%

34%

Exhibit 1.9: GCC Aluminum Smelting and Non-Smelting Companies


All GCC states have

downstream

companies with UAE

and Bahrain having

primary production

capabilities

January, 2008


United Arab Emirates

Overview

Aluminum is one of the oldest and most important non-petroleum industries in the

United Arab Emirates. The sector has spearheaded the country’s drive to diversify its

economy away from the oil and gas sector and to gain a foothold in this highly

important industry. The availability of raw materials and major resources used in the

production is qualifying the country to be dominant in the GCC aluminum industry.

Current Infrastructure

The UAE currently has eleven companies specializing in upstream and downstream

aluminum related activities5. Among these DUBAL is the only primary production

facility in the UAE. Exhibit 1.10 displays the total current and future annual

production of aluminum in the UAE.

Although Dubai has a number of downstream companies, there are only two players

in the market with significant production levels.

Exhibit 1.11 displays the current share of existing companies and the future share

which will result after all planned projects are operational.

5 Zawya, GCG Analysis

Exhibit 1.10: UAE Aluminum Metal and Related Production (Million tons)

Source: DUBAL, Zawya, GCG Analysis

Projects coming on

stream will represent

almost a 250%

increase in capacity to

the aluminum

industry in the UAE

.86

3

Current Future

2006A 2011E

January, 2008


7%

93%

52%

18%

23%

3%

4%

2006A 2011E

Gulf Extrusions Dubal Noval Ruwais Mubadala (EMAL)

The above graph highlights the change in market share of the existing two players

which will result once existing players complete capacity expansions and once new

players enter the market. For example, after three new players enter the market,

DUBAL’s market share will decrease from a current 93% to an estimated 52% in 5

years.

Activities of Existing Companies

As mentioned earlier, DUBAL is the only upstream (i.e. production of aluminum

metal) company in the UAE and the other companies are involved in various

downstream (i.e. production of end-products) activities. Exhibit 1.12 displays a

matrix of activities.

Company Upstream

Primary Prod. Extrusions Façade Syst. Bev. Cans Alum. & Glass Misc.

DUBAL ��

Gulf Extrusions ��

Alumco ��

Alico ��

Alutec

Al Fahya (AFAF) ��

Bin Hussain ��

Hamarain and Partners

Rigidal ��

Sunrise Metal Coating ��

Thomas Bennett Gulf ��

Fabricated Metal Products

Exhibit 1.12: Aluminum Activity Matrix - UAE


Exhibit 1.11: UAE Aluminum Company Market Share Comparison


Aluminum companies

in the UAE produce a

variety of downstream

products

The UAE aluminum

industry landscape

will change quite

significantly as new

players come on board

January, 2008


Major Up and Coming Projects6

The country’s capital, Abu Dhabi, has made a grand entrance into the aluminum

production scene over the past few years. Projects on the drawing board call for the

Emirate to become one of the largest aluminum producers in the world over the next

decade. Some of the major projects are:

1. Emirates Aluminum (EMAL)

In early 2007, Mubadala investment company and Dubai Aluminum came together

to create Emirates Aluminum (EMAL). The AED 33 billion project will have an

initial capacity of 700,000 tpy by 2010 and gradually increase its capacity to 1.4

million tpy in the years that follow. DUBAL’s technological expertise will play a

critical role in this project.

2. Ruwais Aluminum Smelter

During late 2006, General Holding Corporation and Rio Tinto Aluminum formed the

Abu Dhabi Aluminum Company (ADALCO) under which the Ruwais Aluminum

Smelter Project was launched. The project, valued at approximately AED 70 billion,

will have an initial capacity of 550,000 tpy which will be increased to 2 million tpy

over several phases. The first phase of the project is expected to be completed in

2011.

Upon completion of these two mega projects, the UAE will become the GCC’s top

aluminum producer with a total capacity of over 3 million tons.

6 Zawya, Company Websites

January, 2008


Bahrain

Overview

In addition to the UAE, Bahrain is currently producing aluminum as well as a variety

of aluminum products. Bahrain has incorporated industry-based business models in

order to diversify the sources of income in its economy and the aluminum industry

has been one successful way to accomplish this goal. There is one primary

production facility in Bahrain and six companies that rely on a large portion of the

primary production output as a feedstock for their aluminum products.7


Bahrain is currently producing aluminum via smelters operated by Aluminum

Bahrain or ALBA. Production of aluminum in Bahrain was over 870,000 tons for

2006 based on the production of ALBA, Bahrain’s only aluminum producer.8 There

are also a number of specialized or downstream production facilities in Bahrain that

rely on aluminum from ALBA for their production. ALBA supplies approximately

50% of its aluminum to support the downstream aluminum industry in Bahrain.

Exhibit 1.13 displays total current aluminum production for all aluminum companies

in Bahrain.

No new future projects have been planned in Bahrain and all increases in capacity

will come from existing plant expansions.

Exhibit 1.14 displays the structure and current production of selected companies in

Bahrain.


8 Aluminium Bahrain

Exhibit 1.13: Bahrain Aluminum Production (Thousand tons)

Source: ALBA, Zawya, GCG Analysis

Downstream

production is a

growing industry in

Bahrain 872k

2006A

Current

January, 2008


s


Exhibit 1.15 highlights the activity matrix for aluminum companies in Bahrain.

Company Upstream


ALBA ��

Balexco ��

Bamco

Bahrain Atomisers ��

Bassam Aluminum ��

Midal Cables ��

Garmco ��


Exhibit 1.14: Aluminum Company Market Share Comparison (‘000 tons)


Exhibit 1.15: Aluminum Activity Matrix - Bahrain


ALBA is one of two

primary producers in

the GCC

There are several

downstream

production companies

in Bahrain

872

ALBA

306

26

120

160

8%

39%

52%

Balexco Midal Cables Garmco Total

Approx. 50% Prod.

January, 2008


Qatar

Overview

Qatar has the world’s third-largest gas reserves9. It therefore comes as no surprise

that the State has encouraged and invested heavily in utilizing its natural resources to

establish a healthy manufacturing and industrial sector. Qatar has three downstream

aluminum companies and although Qatar does not currently have aluminum

producing capabilities, an exciting project is underway, namely, Qatalum.


Qatar has three companies specializing in downstream production activities. These

are Aluglass, Alutec and Ishaq and Sons Co.10

These are all small companies that do

not have significant production numbers.

Exhibit 1.16 displays expected future aluminum production in Qatar.

The future production number represents the production which will be available once

Qatar’s major aluminum project, Qatalum, begins production.

9 Ministry of Economy and Commerce, State of Qatar


Exhibit 1.16: Qatar Future Aluminum Production (Million tons)


2010E

1.2

Qatar has

one major aluminum

project in the pipeline

January, 2008



Exhibit 1.17 highlights the activity matrix for the three companies in Qatar.

Company Upstream

Primary Production Extrusions Façade Systems Beverage Cans Aluminum and Glass Misc.

Aluglass ��

ALU-TEC ��

Ishaq and Sons Co. ��



1. Qatalum

In 2006 it was announced that government owned oil and gas company Qatar

Petroleum (QP), and Hydro, a Norwegian aluminum and renewable energy company,

initiated a new aluminum smelter project called Qatalum. The former company will

provide the energy component and the latter company will provide the technology

and expertise for producing extrusion ingles –the plants’ main product. The cost of

the project is estimated to be USD 4.8 billion and will include an aluminum smelter

and a 1350 megawatt power plant. The final capacity of the smelter will be 1.2

million tpy by 2010 and the first phase capacity will be 585,000 tpy. Construction of

the smelter is already underway.

Industrial Cities

Mesaieed Industrial City (MIC) and Ras Laffan Industrial City are the two main

industrial cities in the State of Qatar. The other two are Doha Industrial Estate and

Dukhan Petroleum City. MIC was set up to provide the services and infrastructure

for all present and future industries in Qatar. The Qatalum project will be established

in this industrial base. The Ras Laffan Industrial City is the State’s most recent

industrial city and the port at Ras Laffan is the world's largest Liquefied Natural Gas

(LNG) exporting facility.

11

Zawya, Company Websites

Exhibit 1.17: Aluminum Activity Matrix - Qatar


The aluminum

industry is quite small

in Qatar

January, 2008


Oman

Overview

The Sultanate of Oman began plans to diversify its economy soon after the decline of

oil prices in 1999. Sources of non-oil income such as natural gas, industry,

manufacturing, tourism and the private sector formed the basis of the diversification

framework. Manufacturing is currently one of the key diversification areas of the

economy. Similar to Qatar, Oman does not have a primary metal production facility,

but a project is in the pipeline.


Oman currently has a single downstream aluminum player and a single aluminum

project on the way. Exhibit 1.18 displays current and future capacity of aluminum in

the Sultanate.

Exhibit 1.19 compares the market scenario in Oman today and once the new project

is finalized, which will be the first primary production facility in Oman.

Exhibit 1.18: Oman Current and Future Aluminum Production (‘000 tons)


18k

508k

Current Future

2011E2006A

Downstream

production is low and

upstream production

is expected to begin in

a few years

January, 2008


95%

5%

100%

2006A 2008E

Napco Sohar


1. Sohar Aluminum Company

The company was established in 2004 with the mission to build Oman’s first

aluminum smelter. Oman Oil Company, Abu Dhabi Water & Electricity Authority,

and the global aluminum leader Alcan came together to form the Sohar Aluminum

Company (SAC) project. The smelter will have an initial capacity of 330,000 tpy and

will begin operations mid 2008. This smelter will also have a dedicated gas based

power plant providing between 800 and 1400 megawatts of power.

Sohar Industrial Estate and Sohar Port

The purpose of the Sohar Industrial Estate is to serve as a site for all the major

industries and their related entities. In addition to the Sohar Port which serves the

Sohar Industrial Estate, Oman has many ports. The country’s coastline which

extends 1,700 kilometers from the Arabian Sea to the Gulf of Oman has encouraged

shipping activity.

12


Exhibit 1.19: Oman Aluminum Company Market Share Comparison

Source: Company Websites, GCG Analysis

National Aluminum

Products Company is

the only aluminum

company in Oman

and manufactures

extruded products

January, 2008


Kuwait

Overview

According to the Public Authority for Industry (PAI), the industrial sector is one of

the most important sources of national income and the main pillar of the economy of

the State of Kuwait. With regards to the aluminum industry, the State of Kuwait has

five small to mid-size downstream aluminum businesses.


Kuwait has five downstream aluminum companies.13

Exhibit 1.20 displays the

current downstream production in Kuwait.

Currently there are no planned projects in Kuwait.


Exhibit 1.21 displays the activity matrix for the companies in Kuwait.

Company Upstream


Kalexco ��

Al Hadi Aluminum ��

Aluminum Industries Co. ��

Arabian Light Metals ��

Kuwait Aluminum Co. ��


13

Zawya, GCG Analysis

Exhibit 1.21: Aluminum Activity Matrix - Kuwait


Exhibit 1.20: Kuwait Aluminum Production (Thousand tons)


Production quantities

of downstream

aluminum products

are not significant

Most companies are

involved in the

distribution of

aluminum products

rather than primary

production

2006A

Current

12

January, 2008


Saudi Arabia

Overview

Saudi Arabia is the only state in the GCC that has bauxite deposits. The deposits are

located in the north-central region of Saudi Arabia known as Az Zabirah. The

amount of bauxite reserves is 101.8 Mt.14

In order to access the deposits road and rail

access is necessary. Currently the infrastructure to access the deposits has not been

set up and due to this barrier no aluminum industry has been established yet,

however, a number of downstream players exist and a few major projects will be

finalized in the near future.


The Kingdom has the largest number of downstream players in the GCC aluminum

industry. There are fourteen downstream companies specializing in a variety of

aluminum-related activities.15

Exhibit 1.22 displays primary metal production capacity in Saudi Arabia.

There are three planned projects in Saudi Arabia having a total capacity of over 1.4

million. Exhibit 1.23 highlights the market share that each of these projects, once

completed, will have.

14

Ministry of Petroleum and Mineral Resources, Deputy Ministry for Mineral Resources 15

Zawya, GCG Analysis

Exhibit 1.22: Saudi Arabia Aluminum Production (Million tons)


Currently Saudi

Arabia’s natural

resources remain

untapped due to lack

of necessary

infrastructure

Saudi Arabia

1.5

Future

January, 2008


1,465

720

700

45

49%

48%

3%

Al Ahsa Chip Manu. Jizan Aluminum Maaden Complex Total

The above graph depicts that the Ma’aden Integrated Aluminum complex will be the

largest among the planned projects. The Complex will not only be the largest project

in Saudi Arabia but also one of the largest in the GCC.


Exhibit 1.24 displays the activity matrix for the existing companies in Saudi Arabia.

Company

Mining Primary Production Extrusions Façade Systems Aluminum and Glass Misc.

Al Muhaidib ��

Alumaco ��

Alupco ��

Kafco ��

Asamco ��

Madarioun Alumco ��

National Aluminum ��

Nafcel ��

Ramah Aluminum ��

Riyadh Aluminum ��

Salumco ��

Sgapco ��

Uacan ��

Crown Jeddah Co. ��

Al Waffa ��

Fabricated Metal ProductsUpstream

Exhibit 1.24: Aluminum Activity Matrix - KSA

Exhibit 1.23: Aluminum Projects Market Share (Thousand tons)


The two biggest

projects will add over

1.4 million tpy to the

KSA’s current

aluminum capacity

Saudi Arabian

aluminum companies

produce a variety of

aluminum products


January, 2008



1. Ma’aden Az Zabira Aluminum Project

In order to capitalize the region’s significant bauxite reserves a bauxite mine,

alumina refinery and aluminum smelter are all being built via a USD 7 billion project

undertaken by the Saudi Arabian Mining Company also known as Ma’aden. Rail

and road access linking the mine to the refinery/smelter complex will be provided by

the Ministry of Finance. The smelter will have a capacity of 720,000 tpy and

Canada’s Alcan will be providing the refinery and smelter technology. A power and

desalination complex and a port will also be built. The project is scheduled to begin

operations in 2011.

2. Jazan Aluminum Smelter

Two thirds of the Jazan Economic City is a dedicated industrial zone. One of the

projects taking place will be the construction of an aluminum complex consisting of

a smelter with a capacity of 700,000 tpy and an integrated alumina refinery. The

project is scheduled to complete in 2010 and has an estimated cost of USD 4 billion.

16


January, 2008


STEEL

Steel, an alloy of iron and small amounts of carbon, became a mass-produced good

via the Bessemer process in the mid-19th

century. Steel is the fundamental

component required in the creation of buildings, roads, vehicles and the general

infrastructure of a nation. Its characteristics – strong, light, durable, corrosion-

resistant, adaptable and completely recyclable – have made it extremely popular. The

steel industry is a major contributor to the economies of developed and developing

nations. A full-fledged steel industry is one way of gauging the robustness of a

country’s economy.

Exhibit 2.1 displays the global steel production timeline.

0

200

400

600

800

1000

1200

1400

1950 1955 1960 1965 1970 1975 1980 1985 1996 1995 1990 1998 1999 1997 2000 2001 2002 2003 2004 2005 2006

The History of Steel

The development of the steel industry has undergone three distinct phases. The first

phase was during the post-war industrial era when steel was widely used in the

construction of buildings and infrastructure. The second phase was during the

breakup of the USSR when steel production became much higher than consumption.

The third and current phase, which is a boom phase, is one which has seen the

shifting of steel production to developing countries and the control of global steel

supply. The industry has been plagued by oversupply and low margins, however,

things are beginning to change.

Exhibit 2.2 displays the historical phases of steel.

Exhibit 2.1: Global Steel Production (Million tons) 1950 - 2006

Source: IISI, GCG Analysis

Exhibit 2.2: Steel Phases Timeline


Steel is currently in its

boom phase with

production levels

rising each year

1950-1970 1970-2000 2000-2006

High demand for steel in infrastructure projects in

industrialized countries

An oversupply of steel

and low demand

plague the markets

Demand led by

India, China and

other developing countries spurs

growth

Oversupply of steel

has been a problem in

the past years

January, 2008


Steel Facts

Steel was first produced via the Bessemer process in the 1850’s. Iron ore is the main

raw material used in the making of steel and 98% of all mined iron ore is used for

this purpose.17

Major producers of iron ore include Australia and the BRIC countries

- Brazil, Russia, India and China. One interesting fact about steel is that it is highly

recyclable. The use of steel scrap in making steel is highly prevalent due to its lower

cost and the fact that steel retains its characteristics during the recycling process.

Steel products include long, flat, semi-finished, finished, hot rolled, cold-rolled etc.

Exhibit 2.3 classifies various kinds of steel products in terms their place along the

value chain.

Steel can be produced using scrap (recycled steel) in an electric arc furnace, using

iron ore, coke (a derivative of coal) and limestone in a blast furnace via the basic

oxygen steelmaking process or using iron ore in the direct reduction process (DRI)

using natural gas.

An ingot is the absolute first shape that molten metal takes on. After this, ingots can

be molded into blooms, billets and slabs. These are collectively referred to as semi

finished shapes or semi finished products. Blooms and billets are used in the

production of long products and slabs are used in the production of flat products.

Long products are bars, rods and steel sections. Flat products are plates, strip or hot-

rolled (HR) coils which are much thinner than plates. Specialty products include

coated steel products and wire.

17

Mineral Information Institute (MII)

Exhibit 2.3: Steel Products Value Chain

Source: Industry Websites, GCG Analysis

Long and flat

products have an

almost infinite

number of uses

Ingots

Semi-Finished Products

Long Products Flat Products Specialty Products

January, 2008


Global Production

The Chinese steel industry is the largest in the world. Exhibit 2.4 displays global

steel production and highlights the top four global producers.

423,207

116,22798,539

70,755

China Japan USA Russia

`

China is the top producer and consumer of steel, followed by Japan and the USA.

Exhibit 2.5 displays world steel consumption by region.

China

31%

Other Asia

21%

Europe

20%

NAFTA

15%

MENA

5%

CIS

5%

Other

4%

It is the increase in demand and supply from China that is fuelling the global steel

industry. It remains one of the most important markets in terms of size and potential

for growth.

Exhibit 2.5: Global Steel Consumption Share – 2006


Exhibit 2.4: Top Four Steel Producing Countries 2006 (Million Tons)


China leads the pack

with significantly

higher production

than the others

Asian consumption of

steel accounts for over

50% of total steel

consumption

January, 2008


Exhibit 2.6 displays comparable world growth, including China, in steel production

over the last 6 years.

828,297

946,741

1,223,055

2000 2003 2006

CAGR : 7%

Exhibit 2.7 displays the growth in Chinese steel production over the last 6 years.

The two charts above display the relative growth of China’s steel production to the

rest of the world. Indeed the difference is extreme.

Exhibit 2.7: Steel Production Growth China 2000 - 2006



Exhibit 2.6: Steel Production Growth World 2000- 2006

126,317

219,449

423,207

2000 2003 2006

CAGR: 22%

China’s steel

production has shot

up due to domestic

growth

Compared to China,

steel production

growth for the rest of

the world has been

quite low

January, 2008


Steel in the GCC

The steel industry is well developed in the GCC and is much more fragmented than,

for example, the aluminum industry, with many players taking a chunk of the overall

production pie. As we will see, all the GCC states have invested in local steel

industries. Considering the current economic boom, infrastructure projects and

construction activity are the main drivers of the demand for manufacturing in the

GCC and steel is the construction material of choice. GCC member states consume

378 kg of steel per person. The corresponding rate at the world level is only 182 kg.18

Currently, demand outstrips supply in the GCC and steel prices have already risen by

25% this year.

Exhibit 2.8 displays the steel imports of GCC countries over three years. It is clear

from the graph that steel imports have gone up and local production is not meeting

demand.

0

1

2

3

4

5

6

UAE KSA Kuwait Qatar Oman Bahrain

2003 2004 2005

Some strategic advantages that GCC states have relative to the rest of the world are:

1) Comparative Advantage – Energy and Natural Gas: Similar to aluminum

smelting, steel processing is an energy intensive process and readily

available low-cost energy resources are plentiful in the GCC. Due to the

availability of natural gas, GCC states can produce steel via the direct

reduction (DRI) process which does not require a heavy capital investment.

2) Labor Advantage – Due to the availability of low-cost labor construction is

literally out of control in the GCC. Steel is extensively used in the

18

Gulf Organization for Industrial Consulting (GOIC), Gulf Industrial Bulletin, Volume

6, Issue 73, August 2006

Exhibit 2.8: GCC Steel Imports (Million tons)

Source: ISSB, GCG Analysis

Steel imports for all

GCC states, except

Kuwait, have been

rising, with the UAE

importing the highest

quantities

January, 2008


construction industry and given that a large number of projects are currently

taking place, the demand for steel is definitely here to stay.

Exhibit 2.9 displays the current steel capacity in the region and the capacity once all

future projects are complete.

Reinforcement Bars- Strong Demand

The demand for reinforcement bars, or rebar’s as they are commonly known, is high

in the GCC. More than 3 million tons of rebar’s are traded and consumed each year

and this figure is expected to reach 4 million tons by the end of the year.19

Steel rebar is used in the building of concrete structures in order to provide stability

and durability to the structure and because the two materials have suitable physical

characteristics. As concrete is a brittle material and steel a strong one, steel is usually

embedded into concrete structures to prevent the collapse of the structure.

Furthermore both materials have similar reactions to temperature changes making

them a good fit for each other. Rebar is used in bridges, highways and other concrete

structures.

19 Gulf News, “Dubai’s demand for steel rebar to grow 20% annually”, 2007

GCC Steel Projects

Exhibit 2.9: GCC Annual Steel Production (Million tons)


GCC steel production

will increase by over

200% in 2012

14.75

2006A

44.9

2012E

UAE

Oman

Saudi Arabia

Bahrain

Qatar

1.9

1.7

5.7

4

0.25

9

6.4

14.6

GCC Total

Current Future

13

1.4

Kuwait

1.7

January, 2008


Exhibit 2.10 displays the current scenario of steel projects in the GCC with greater

detail.


Al Ghurair/Tradeline Steel Complex 400,000 2007 UAE

EIS Complex Expansion 2 million 2008 UAE

ANIE Steel Complex 350,000 2008 UAE

Essar Steel Plant 1 million 2008 UAEESI Musaffah Steel Plant 4.1 million 2008 UAE

Hadeed Expansion Project 3.25 million 2008 KSA

Al Shadeed Iron and Steel Complex 1.5 million 2008 Oman

GIIC Iron Ore Pellet Plant 5 million 2009 Bahrain

Bildco Steel Rolling Mill 300,000 2009 UAEPKIC JEC Steel Plant 1 million 2009 KSA

Al Ittefaq SPC Steel Plant 2 million 2009 KSA

Jubail Seamless Tube Mill 500,000 2009 KSA

Atoun Yanbu Steel Plant 1.5 million 2009 KSA

GIIC Steel Complex 4 million 2010 BahrainSIPC Iron ore Pellet Plant 7.5 million 2010 Oman

Given the advantages that the GCC states have, and the large number of projects in

the pipeline, the steel industry is a profitable business and will continue to be so in

the future.

Exhibit 2.11 displays the number of existing steel companies in the GCC.

25

1

2

2

6

7

7

4%

8%

8%

24%

28%

28%

Qatar Bahrain Oman Kuwait UAE KSA Total

Exhibit 2.10: GCC Steel Project Details


The UAE and KSA

are initiating over

70% of the Steel

projects in the GCC

Exhibit 2.11: GCC Steel Companies – Regional Breakdown

Currently, major steel

producing companies

are few in the GCC


January, 2008



Overview

In 2005, the UAE was the fourth largest net importer of steel in the world after the

United States, Thailand and Iran, importing 5.4 million metric tons of steel.20

There

are a multitude of infrastructure projects developing in UAE. The construction of the

tallest building in the world, various residential complexes and the Dubai Metro are

all examples of major projects that involve the use of steel on a massive scale. The

steel demand is expected to grow from over 5 million tons currently to 10 million

tons by 2010.21


The UAE has 4 major steel companies and a number of smaller ones. Exhibit 2.12

displays the current and future capacity of steel in the UAE.

20

International Iron and Steel Institute, Major Importers and Exporters of Steel, 2005 21 Gulf News, “Demand for steel in UAE set to double in three years”, December

2007

Exhibit 2.12: UAE Steel Production (Million tons)


UAE Steel production

will increase by 235%

in 2009

2006A 2009E

1.7

5.7

Current Future

January, 2008


Exhibit 2.13 displays the current market share of the existing companies and the

market share once all new projects and expansions are complete.

7%

36%

29%

18%17% 17%

5%5% 5%

15%

45%

Qatar

Steel

FZE

Alam

Steel

ANIE ESI Bildco Al

Ghurair

Essar

2006A

2010E

While all existing companies are expected to lose market share, Emirates Steel

Industries will be the only company to gain market share in the future, due a major

expansion project. All the other steel companies will have a smaller share of the

market as new players enter the industry.


Exhibit 2.14 highlights the activity matrix for aluminum companies in the UAE.

Company

Steel Pellets, Ingots Semi- finished Long Flat Misc.

ANIE ��

ESI ��

Qatar Steel FZE ��

Alam Steel ��

BILDCO ��

ADPICO ��

Dubai Drydocks ��

Upstream Downstream Products

Exhibit 2.13: UAE Steel Company Market Share Comparison

Exhibit 2.14: Steel Activity Matrix - UAE


The UAE has a

healthy and vibrant

steel industry

Long products such as

rebar are in high

demand in the UAE


January, 2008



1. Emirates Integrated Steel (EIS) Complex Expansion

The project is owned by the General Holding Corporation under the name of

Emirates Iron Industries Company (EIIC) and will be an addition to the Emirates

Steel Industries’ current productions. A capacity of 2 million tpy of wire rod and

rebar will be reached via the addition of 2 new rolling mills, a direct reduction plant

and a steel melt shop.

2. ANIE Musaffah Steel Complex

ANIE is planning the construction of a Direct Reduction Iron (DRI) sponge iron

plant with a capacity of 250,000 tpy and a steel billet manufacturing facility with a

capacity of 350,000 tpy. The cost of the project is USD 300 million and it is

expected to be complete by 2008.

22


January, 2008


Bahrain

Overview

The Bahrain steel industry is in its developing stage. There is one main company that

is heading all future projects.


Exhibit 2.15 displays the current and future capacity of steel in Bahrain.

The Gulf Industrial Investment Company (GIIC) is the only company that produces

steel and is the only company planning projects in the market. Hence all steel

production market shares will belong to GIIC.


Exhibit 2.16 highlights the activity matrix for aluminum companies in Bahrain.

Company


BRC Weldmesh ��

GIIC ��


Exhibit 2.15: Bahrain Steel Production (Million tons)


Exhibit 2.16: Steel Activity Matrix - Bahrain


Steel production in

Bahrain will increase

by 225% in 2010

Bahrain has a limited

number of steel

companies

13

2006A

4Current

Future

2010A

January, 2008



GIIC Projects

The GIIC Iron Ore Pellet Plant and Steel Complex are the second and third largest

projects by capacity in the GCC, respectively. The former facility will increase iron

ore pellet production capacity to 11 million and is expected to be completed by late

2009. The latter facility will include a Direct Reduction Iron (DRI) plant with a

capacity of 1.6 million tpy, a steel melt shop with a capacity of 1.2 million tpy and a

rolling mill with a capacity of 1.1 million tpy. The expected year of completion is

2010 and the total cost of the two projects is over USD 925 million.

23


January, 2008


Qatar

Overview

With Qatar’s abundant oil and gas resources and revenues stemming from the same,

the local steel industry is thriving. Qatar’s major government owned steel company

QASCO has placed Qatar on the regional and international steel map and has

emerged as one of the biggest players this side of the world. Qatar’s steel industry is

catering to the increasing domestic demand and to the general GCC demand.


Qatar currently has only one steel company with no projects planned in the near

future. Exhibit 2.17 displays the current production of steel in Qatar.

Activity Matrix

Exhibit 2.18 highlights the activity matrix for Qatar Steel.

Company


Qatar Steel ��


Exhibit 2.17: Qatar Steel Production (Million tons)


Qatar has only one

major producer of

steel, namely, Qatar

Steel

2006A

1.9Current

Exhibit 2.18 Steel Activity Matrix - Qatar


Qatar Steel is the only

steel company in

Qatar

January, 2008


Oman

Overview

Manufacturing is currently one of the key diversification areas of the economy. As

such Oman’s steel industry is expanding at a healthy rate with two significant

projects in the pipeline.


Oman currently has one company producing rebar. Also, two projects with a

combined capacity of 9 million tpy are on the way. Exhibit 2.19 displays current and

future steel production in Oman.

Activity Matrix

Exhibit 2.20 highlights the activity matrix for steel companies in Oman.

Company


Sohar Steel ��

Al Jazeera Steel Products Co. ��


Exhibit 2.19 Oman Steel Production (Million tons)


Oman’s two up and

coming projects will

allow country’s to

establish significant

steel production

capacity by 2010

0.25

9

Current Future

2010E2006A

Exhibit 2.20 Steel Activity Matrix - Oman


Oman steel companies

specialize in long

products

January, 2008



1. Sohar Industrial Port Company (SIPC) Iron ore Pellet Plant

The SIPC steel project is the largest both by contract value and by capacity size and

will be located in the Sohar Industrial City. An iron ore palletizing plant with a

capacity of 7.5 million tpy will be built. Companhia Vale do Rio Doce (CVRD), the

world’s second largest mining company and the world leader in iron ore and pellets

production and commercialization conducted the feasibility study for this project and

will provide all the iron ore for the plants operations. SIPC is a 50:50 partnership

between the Government of Oman and the Rotterdam Municipal Port Management

of Netherlands.

2. Shadeed Iron and Steel Complex

The project will consist of a 1 million tpy steel melt shop and a 500,000 tpy Direct

Reduction Iron (DRI) plant. The Shadeed Iron & Steel Limited company, a part of

Al Ghaith Holding was established in 2006. The USD 870 million steel project is

still in the process of being set up and will begin primary metal production in 2008.

Annual production will be 1.1 million tpy of steel billets and 400,000 tpy of hot

briquette iron (HBI) which is a feed material in steelmaking. The complex will be

located in the Sohar Industrial City.

24


January, 2008


Kuwait

Overview

Kuwait has a number of steel products companies but primary production facilities

have not yet been established in the State.


Kuwait has around ten companies supplying steel products in Kuwait but no

upstream producers of steel.25

Exhibit 2.21 displays the current production of downstream steel products in Kuwait.

Exhibit 2.22 displays the current market share of the existing companies.

25

Zawya, GCG Analysis

Exhibit 2.21: Kuwait Steel Production (Million tons)


Kuwait steel

production will

increase by over 20%

in 2008

1.66

2006A

1.4

Current

Future

2008E

January, 2008


120

150

500

600

1370

11%

36%

44%

9%

KPIOS Kuwait Reinf. Steel Al Oula United Steel Total


Exhibit 2.23 highlights the activity matrix for steel companies in Kuwait.

Company


United Steel ��

Al Oula ��

Kuwait Reinforced Steel ��

KPIOS ��

Qudaibi Steel ��

Hayakel ��


Exhibit 2.23: Steel Activity Matrix – Kuwait


Exhibit 2.22: Kuwait Steel Company Market Share Comparison


United Steel is the

only manufacturer of

reinforcement bars in

Kuwait

In relation to other

industries Kuwait has

a fairly competitive

steel industry

January, 2008


Saudi Arabia

Overview

In 2005, Saudi Arabia was the twelfth largest net importer of steel in the world.26

The Kingdom has the most players in the steel industry compared to the other GCC

states and thus contributes significantly to domestic requirements. In the Kingdom,

iron and steel factories are entitled to benefit from the Public Investment Fund which

finances projects from these industries and further helps growth of the steel industry.


Saudi Arabia has seven major steel companies specializing in a variety of products.

Exhibit 2.24 displays the current and future production of steel in the Kingdom.

Exhibit 2.25 displays the current market share of the existing companies and the

market share once all new projects and expansions are complete.

26

International Iron and Steel Institute, Major Importers and Exporters of Steel, 2005

Exhibit 2.24: Saudi Arabia Steel Production (Million tons)


Steel production in

the KSA will increase

by almost 130% in

2009

6.4

14.6

2006A 2009E

Current Future

January, 2008


11%

61%

16%

8%7%6%2%

7%4%

49%

20%

3%3%3%1%

APC Attieh

Steel

United

Gulf

Rajhi

Steel

Ittefaq Hadeed Jubail

Mill

PKIC

JEC

Plant

Yanbu

Plant

2006A

2009E

The graph above shows that all existing companies will lose market share over the

next few years except Al Ittefaq Steel Products Company (ISPC). This is due to the

company’s steel project which will significantly boost the capacity of the company

in the future enabling it to gain market share. It is also clear from the graph that

Hadeed currently has the greatest market share and will also have the greatest market

share in the future, albeit lower than its current share.


Exhibit 2.26 highlights the activity matrix for steel companies in Saudi Arabia.

Company


Hadeed ��

Ittefaq Steel ��

Rajhi Steel ��

United Gulf Steel ��

Zamil Steel ��

APC ��

Attieh Steel ��


Exhibit 2.25: Steel Company Market Share Comparison - KSA


Exhibit 2.26: Steel Activity Matrix - KSA


Hadeed is and will

remain the market

leader in steel

production in the KSA

Long products

represent the bulk of

steel products

January, 2008



1. Al Ittefaq Steel Products Company – Dammam Steel Plant

ISPC-Dammam is planning to build a flat steel products plant in the Dammam

Second Industrial City. The plant costs USD 400 million and will have a capacity of

2 million tpy. The plant is expected to be completed by late 2009.

2. Hadeed Expansion Project

Hadeed is building a 1.75 million tpy DRI plant and increasing its flat products

capacity to 2 million and its long products capacity to 3 million. Total capacity

inreaase will be 3.25 and actual increase in steel production will be 1.22 million tpy.

The cost of the expansion is USD 383 million and is to be completed by early 2008.

27


January, 2008


CEMENT

Cement, a super-fine gray or white powder, is comprised of four elements – calcium,

silicon, aluminum and iron. Portland cement is the most common type of cement and

was invented by Joseph Aspdin in 1824. It is named after the Isle of Portland, where

the limestone used in its production was quarried. Raw materials involved in the

production of cement can be all or any of the following - limestone, marl, shale, iron

ore, clay, and fly ash. However, the most common ingredients are limestone, clay

and sand. The raw materials are crushed and proportioned in order to produce

cement with specific properties before the production process begins.

Cement production is an energy intensive process with fuel representing 35% of

variable costs.28

A lot of heat is required in the production of cement as temperatures

go as high as 3400 F (one-third of the sun’s surface temperature) in the kiln. The kiln

is the largest moving piece of industrial equipment and the main piece of equipment

used in the production of cement. It is in the kiln that clinker is formed. When raw

materials are heated to extremely high temperatures a chemical reaction takes place

causing the calcium and silicon oxides to fuse into calcium silicates – cement’s key

component. The resulting mass is known as clinker and is gray in color. Once clinker

is cooled, combined with gypsum and made into a powder form it can be called

cement.29

Cement Facts

Clinker is powdered to make cement. The types of cement produced are used to

make concrete with specific properties. The word cement literally means a substance

to make objects adhere to each other. Portland cement is one type of cement; others

include blended and expansive cements. All kinds of cement are hydraulic cements

which means that they harden when mixed with water. Cement is the primary

constituent of concrete. Concrete is a rock-like mass which has a variety of

construction applications - highways, streets, parking lots, parking garages, bridges,

high-rise buildings, dams, homes, floors, sidewalks, driveways, and numerous other

applications.

Exhibit 3.2 displays the physical make-up of concrete.

28

British Cement Association (BCA) 29

Portland Cement Association (PCA)

Exhibit 3.1: The Four Components of Cement

Source: Portland Cement Association, GCG Analysis

20

CaSilvery White

Alkaline Earth Metal

14

SiBlue Grey

Semi Metallic

Element

13

AlSilvery White

Metal

26

FeGrey Metallic Element

Cement plants are

usually located near

limestone quarries

where raw materials

are abundant

January, 2008


Aggregate

67%

Water

16%

Cement

11%

Air

6%

Concrete is formed when paste (cement and water) and aggregate (sand and gravel)

are combined. The water content controls many of the characteristics of the resulting

concrete and low water content results in high quality concrete. The most common

type of concrete usage is ready-mixed concrete.

Exhibit 3.3 displays the value chain of cement.

Exhibit 3.2: The Four Components of Concrete

Exhibit 3.3: Cement Products Value Chain

Source: Industry Websites, GCG Analysis

Source: PCA, GCG Analysis

Aggregate containing

sand and gravel forms

the largest component

of concrete

Ready-mix concrete is

handled in trucks with

revolving drums

Cement

Concrete

Precast Ready-mix Masonry

Clinker

January, 2008


Global Cement Production

China and India are the world leaders in cement production. Exhibit 3.4 displays

cement production on a global level.

1100

155101

68

China India US Japan

The above graph depicts that China has over 40% share of the world’s cement

production. China is also the world’s top consumer of cement. Chinese cement

consumption accounts for more than 46% of world consumption and 75% of

expected growth in world cement consumption during 2007. According to the report

emerging and developing countries such as those of the GCC are generating the rest

of the global growth.30

30

Portland Cement Association, The Monitor, Flash Report, March 2007

Exhibit 3.4: World Cement Production 2006 in Thousand Metric tons

Source: USGS Mineral Commodity Summaries, GCG Analysis

China is the world

leader in cement

production

January, 2008


Cement in the GCC

The construction sector and the cement industry go hand in hand. Construction

activity in all the GCC states is rampant and demand for cement has shot through the

roof in the recent years as have cement prices. The Kingdom of Saudi Arabia and the

UAE are leading the way for the GCC cement industry. Prices have been rising over

the past few years because of the high demand as well as rising fuel and raw material

costs. Coal is being increasingly sought after as a fuel and raw material input.

Capacity expansions are happening region wide and questions of oversupply in the

near future are being addressed. Exhibit 3.5 shows the current and anticipated future

production of cement in the GCC.

GCC Cement Projects

Exhibit 3.6 displays the current scenario of cement projects in the GCC with greater

detail. Most of the capacity increases are arising from the United Arab Emirates and

Saudi Arabia. As mentioned earlier, this is primarily because of the scope of

construction activity and infrastructure developments happening in these regions.

Exhibit 3.5: GCC Annual Cement Production (Million tons)


Annual cement

production in the

GCC will increase by

40% in 2012

2006A

2012E

UAE

Oman

Saudi Arabia

Bahrain

Qatar

7.5

17

29

0.5

3.5

5.75

27

42

GCC Total

Current Future

1.2

Kuwait

2.1

2.9

57.6 80.8

January, 2008


11

1

5

5

9%

45%

45%

Bahrain UAE KSA Total

Exhibit 3.7 displays the projects with greater detail.


Emirates Cement Company Fujairah Plant 1.1 million 2007 UAE

Falcon Cement Plant 730,000 2008 Bahrain

Star Cement Ras Al Khaimah Plant 2 million 2008 UAE

Arkan Building Materials Fujairah Plant 3.1 million 2008 UAE

Najran Cement Plant 3.3 million 2008 KSA

NRC - Arar Cement Plant 2.2 million 2008 KSA

Al Watan Jalajil Cement Plant 3.3 million 2009 KSA

ACC Labuna Cement Plant 4 million 2009 KSA

Al Ahsa Cement Plant 1.8 million 2009 KSA

Al Ain Cement Factory 4 million 2010 UAE

Jebel Ali Cement and Clinker Plant 2.4 million 2010 UAE

In addition to having the most number of planned projects, the UAE and Saudi

Arabia also have the highest number of existing cement producers in the GCC.

Exhibit 3.8 compares the number of existing aluminum companies in the different

GCC states.

Exhibit 3.7: GCC Cement Project Details


Exhibit 3.6: GCC Cement Projects – Regional Breakdown


The UAE and Saudi

Arabia are planning

an equal number of

projects

Arabian Cement

Company is planning

one of the largest

projects in the GCC

January, 2008


29

12

8

3

3

2

1

41%

28%

10%

10%

7%3%

Bahrain Oman Qatar Kuwait KSA UAE Total

Exhibit 3.8: GCC Cement Companies – Regional Breakdown


The UAE and Saudi

Arabia have the

highest number of

cement companies in

the GCC

January, 2008



Overview

The UAE is at the forefront of the cement industry in the GCC. For two years in a

row the international cement conference Cemtech, was held in the UAE and will take

place in the country again in 2008. Aside from being a place where global cement

industry leaders congregate, the UAE, and particularly Dubai is also the leader in

terms of construction activity. A large number of cement and clinker plants in the

UAE are located in the emirate of Ras Al Khaimah due to the availability of raw

materials there. Currently, the price of cement in the UAE is capped at around USD

80 per ton and around 9 cents per kilogram.31

Second Largest Producer

According to the Ministry of Public Works, the UAE is set to become the region’s

second largest producer of cement by 2009 with an annual production of up to 50

million tons34

. However a supply surplus is expected to cause a glut in the UAE

cement market once all capacity expansions are complete. The Kingdom of Saudi

Arabia is currently the region’s top cement producer.

The Ras Al-Khaimah (RAK) Appeal

RAK is the fourth largest emirate in the United Arab Emirates. The emirate has

become an important location for players in the UAE cement industry primarily

because of the abundance of limestone deposits in and around the Hajjar Mountain

area. Four cement factories have set up operations in RAK.


Every emirate in the UAE has a cement factory. The UAE currently has twelve

companies specializing in the production of cement and clinker and twenty-six

companies involved in the downstream activities such as ready-mix and precast

concrete.32

Exhibit 3.9 displays the total current and expected future annual production of

cement in the UAE.

31

Gulf News, “Cement sector likely to suffer from overcapacity”, June 2007 32


January, 2008


The future capacity increase shown on the above display will result from the

expansion of existing companies and the entrance of new companies in the market.

Exhibit 3.10 displays the change in market share that will result once expansions and

new projects come on stream.

0% 5% 10% 15% 20% 25% 30%

ECC Fujairah Plant

Star Cement RAK

RAK White Cement

Umm Al Qaiwain

Jebel Ali Cement

Ajman Cement

RAK Cement

Binani

Arkan

Fujairah Cement

National Cement

Sharjah Cement

Gulf Cement

Union Cement

2006A

2010E



The UAE’s demand

for cement is on the

rise and will increase

by 70% in 2010

Union Cement is the

currently leader in

cement production in

the UAE

Exhibit 3.10: UAE Cement Company Market Share Comparison

2006A 2010E

17

29

Current Future

Exhibit 3.9: UAE Cement Production (Million tons)

January, 2008


The above graph shows that as of today Union Cement Company has the maximum

market share in the UAE cement market. However, in the next few years this share

will decrease from 24% to 15%. In 2010, Arkan Building Materials Company will

have the largest share in the cement market – 28%. Arkan, which is owned by the

General Holding Group, will have the following factories under its wing – Emirates

Cement Factory, Al Ain Cement Factory and the Fujairah Cement Plant.


The UAE has around twenty-six downstream cement companies specializing in the

production of ready-mixed, precast and masonry cement. Exhibit 3.11 displays the

activity matrix for companies in the UAE. The top 4 cement companies are listed

along with a few downstream players.

Company

Quarrying Cement/Clinker Readymix Precast Masonry Misc.

Union Cement ��

Gulf Cement Co. ��

Sharjah Cement ��

National Cement ��

Contech

Al Meraikhi ��

Arabian Mix ��

Arabtec Precast ��

Upstream Downstream


1. Al Ain Cement Factory

The factory will be owned by the Emirates Cement Factory which was formerly

known as Al Ain Cement Company. The capacity of the cement plant will be 4

million tpy and it will be located in Al Ain Industrial City. Commissioning for the

plant is expected in 2010. The construction for the plant was awarded to China

National Building Material Equipment Corporation (CBMEC).

2. Emirates Cement Company (ECC) Fujairah Plant

ECC is 50% owned by the Egypt-based Orascom Industries Group (OCI). Along

with the Dubai Investment Group and the Government of Fujairah the company

plants to build a 1.1 million tpy cement plant in Fujairah. The plant was completed in

August 2007.

33



There is a lot of

competition in the

UAE cement market

Exhibit 3.11: Cement Activity Matrix – UAE

January, 2008


Bahrain

Overview

Bahrain does not have much activity on the cement industry front. There is just one

company at present and one project in its development due to be completed in early

2008. Bahrain also has three downstream companies.


Bahrain has one cement company and one project underway; these are Arabian Gulf

Cement and Falcon Cement Company respectively. Exhibit 3.12 displays the current

and future production capacity of cement in Bahrain.


Bahrain has two downstream cement companies specializing in the production of

ready-mixed, precast and masonry cement. Exhibit 3.13 displays the activity matrix

for companies in Bahrain.

Exhibit 3.12: Bahrain Cement Production (Million tons)


Bahrain cement

production will

increase by 140% in

2008

0.5

2006A

1.2

Future

Current

2008E

January, 2008


Company


Arabian Gulf ��

Haji Hassan Group ��

Delmon ��

Upstream Downstream


Falcon Cement Plant

Falcon Cement Company which was established at the end of 2008 is setting up the

Falcon Cement Plant which will have a yearly capacity of 730,000 tpy. The plant is

currently under construction and is expected to be operational in early 2008.

34



Exhibit 3.13: Cement Activity Matrix - Bahrain

There are limited

cement companies in

Bahrain

January, 2008


Qatar

Overview

Qatar has been involved in a multitude of infrastructure and real estate developments

such as the Pearl Qatar, the New Doha International Airport, the Friendship Bridge,

Mesaieed petrochemical complex, Qatalum Aluminum Smelter project and many

others.

Cement therefore is in high demand and according to Qatar’s Gulf Cement Company

current production needs to be increased by 60% in order to meet daily demand of

20,000 tons of cement.


There are two cement companies in Qatar. Exhibit 3.14 displays the current cement

capacity in Qatar and the capacity once all expansions are complete.

Exhibit 3.15 displays the market share of the two existing companies in

Qatar.

Exhibit 3.14: Qatar Cement Production (Million tons)


Qatar does not

currently have

planned cement

projects

2006A

7.5Current

January, 2008


Qatar National

Cement Co.

76%

Gulf Cement

24%

Activities of Existing Companies Qatar has three downstream cement companies specializing in the production of

ready-mix, precast and masonry cement. Exhibit 3.16 displays the activity matrix for

companies in Qatar.

Company


QNCC ��

GCC ��

Readymix Qatar ��

UPC Qatar ��

Construction Ent. ��

Upstream Downstream

Exhibit 3.15: Qatar Cement Company Market Share Comparison



Exhibit 3.16: Cement Activity Matrix – Qatar

The Qatar cement

industry is essentially

an oligopoly

QNCC is the main

producer of cement in

Qatar

January, 2008


Oman

Overview

Oman’s cement consumption is not as high as that of other GCC member states.

However, GCC member states serve as excellent export markets and as a result

cement production is picking up in Oman to cater to its neighbors. Also, construction

projects are picking up in the Sultanate. According to the Oman Economic Review,

cement consumption was at 2.7 million tons for 2006 representing a 12.5% increase

over the previous year.

The Gonu Effect

Cyclone Gonu struck Oman on June 7, destroying vast amounts of infrastructure and

ringing up a bill of over USD 4 billion in damages. For the Sultanate’s two cement

suppliers the cyclone resulted in disruption of production and a race to meet the

sudden surge in demand.


There are two cement companies in Oman with a combined capacity of over 3.5

million tons of cement per year. Exhibit 3.17 displays the current and future

production of cement in Oman.

Exhibit 3.17: Oman Cement Production (Million tons)

Source: MEED, Zawya, GCG Analysis

Oman cement

production will

increase by 64% in

2008 3.5

5.75

Current Future

2008E2006A

January, 2008


Exhibit 3.18 displays the market share of Oman’s two cement producing companies.

46%

54%

48%

52%

Oman Cement Company Raysut Cement Company

2006A 2008E


Oman has three downstream cement companies specializing in the production of

ready-mix, precast and masonry cement. Exhibit 3.19 displays the activity matrix for

companies in Oman.

Company


OCC ��

RCC ��

Readymix Muscat ��

National Cement ��

Cement Gypsum ��

Upstream Downstream

Exhibit 3.18: Cement Company Market Share Comparison – Oman



Raysut Cement will

have the higher

market share in the

future

OCC and RCC are the

market leaders in

Oman and have a

similar market share

Exhibit 3.19: Cement Activity Matrix – Oman

January, 2008


Kuwait

Overview

Kuwait has one cement producing company, namely, the Kuwait Cement Company

(KCC). There are two other major players in the cement industry and are pure

traders. There is a short supply of cement in the Kuwait market and raw materials are

not readily available.


There are three upstream companies in Kuwait and five downstream companies.

Exhibit 3.20 displays the current and future production of cement in Kuwait.


The UAE has around four downstream cement companies specializing in the

production of ready-mix, precast and masonry cement. Exhibit 3.21 displays the

activity matrix for companies in Kuwait.

Company


KCC ��

KPCC ��

Hilal Cement ��

Gulf Readymix ��

Kuwait British Readymix ��

ACICO ��

Al Maseelah ��

Upstream Downstream

Exhibit 3.20: Kuwait Cement Production (Million tons)



Exhibit 3.21: Cement Activity Matrix – Kuwait

Kuwait cement

production will

increase over the next

few years although

not significantly

Kuwait cement

companies produce a

large variety of

cement products

2.9

2006A

Current Future

2.1

2009E

January, 2008


Saudi Arabia

Overview

The Kingdom is endowed with the raw materials necessary for cement production.

According to the Saudi Geological Survey, the Kingdom has significant reserves of

cement-grade limestone deposits. The deposits are particularly abundant in the

central region of the Kingdom and also along the Red Sea coastline and Jizan area.

Aside from the abundance of raw materials, there is a great deal of activity

happening on the real estate and construction front in Saudi Arabia creating an

enormous market for cement consumption. The Saudi Arabian General Investment

Authority or SAGIA intends to establish six economic cities throughout the

Kingdom through its Economic Cities initiative. The largest of these and the

initiative’s flagship is the USD 26 billion King Abdullah Economic City to be built

in the north of Jeddah.

Similar to the scenario in the UAE, the demand for cement in the KSA exceeds the

supply and thus cement prices are rising. Once all planned capacity expansions are

completed it is expected that cement prices will fall and there will be a supply

overhang of cement in the Saudi Arabian market.


There are eight players in the Saudi Arabia cement market and combined production

of cement for 2006 was around 27 million tons.35

There also seventeen downstream

producers and five projects in the pipeline.

Exhibit 3.22 displays the current and future production of cement in the GCC.

35

Company Websites

Exhibit 3.22: Saudi Arabia Cement Production (Million tons)


Saudi Arabia’s

cement producing

capacity will increase

by 55% over the next

few years

27

42

2006A 2009A

Current Future

January, 2008


New projects and expansions are expected to continue accumulating over the next

few years and it is expected that capacity will more than double over the next few

years. Exhibit 3.23 displays the market share of the existing cement producers in the

Kingdom.

10%

8%

8%

5%

4%

12%

11%

9%

8%

8%

7%

5%

18%

17%

14%

13%

12%

11%

8%

6%4%

Labuna Cement Plant

Najran Cement Plant

Al Watan Jalajil Cement Plant

NRC - Arar Cement Plant

Al Ahsa Cement Plant

Saudi Cement

Southern Province Cement

Yamama Cement

Yanbu Cement

Eastern Province Cement

Arabian Cement

Qassim Cement

Tabuk Cement

2006A

2009E

The above graph shows that the cement industry in Saudi Arabia is a very

fragmented one. Although Saudi Cement has the highest market share, the others are

not far behind. With more projects coming up, the industry will continue to be

increasingly fragmented. Saudi Cement’s market share will decrease from 17% to

11% over the next few years. Of the future projects Labuna Cement Plant will have

the greatest market share.

Since the Kingdom is so large, cement companies cater to specific geographical

markets within the Kingdom.

Exhibit 3.24 displays the location of current producers and the expected location of

future producers.

Exhibit 3.23: KSA Cement Company Market Share Comparison


Saudi Arabia is the

largest cement

producer in the

GCC

January, 2008


The Western region of the Kingdom is bursting with activity such as the King

Abdullah Economic City and various residential projects in the holy cities of Mecca

and Medina so the demand in there should be quite robust.

Activity Matrix

The KSA has a number of downstream cement companies specializing in the

production of ready-mixed, precast and masonry cement. Exhibit 3.25 displays the

activity matrix for companies in the UAE. The top four cement companies are listed

along with a few downstream players.

Company


Saudi Cement ��

Southern Province ��

Yamama Cement ��

Yanbu Cement ��

Saudi Readymix ��

Al Rashid Abetong ��

Ranco ��

Al Khafrah ��

Upstream Downstream

Exhibit 3.24: KSA Company Market Share and Production – Million TPY

Source: Company Websites, GCG Analysis

N

E

S

W Central

Qassim Cement Company

Yamama Cement Company

Al Watan Cement Company - Jalajil Plant

Current

Future

Saudi Cement Company

Eastern Province Cement Company

Southern Province Cement Company

Najran Cement Plant

Arabian Cement Company

Yanbu Cement Company

Arabian Cement Company- Labuna Plant

Tabuk Cement Company

Arar Cement Plant

Jalajil Cement Plant


The Western, Central

and Northern regions

of Saudi Arabia are

the most concentrated

with cement producers

There are plenty of

upstream cement

producers in the

Kingdom

Exhibit 3.25: Cement Activity Matrix – KSA

January, 2008



1. Labuna Cement Factory

Arabian Cement Company is establishing a 4 million tpy cement plant in the western

region of the Kingdom. The expected year of completion is 2009. Italy’s Italcimenti

is currently conducting a feasibility study on the project.

2. Najran Cement Plant

The project will be undertaken by the Najran Cement Company (NCC). The cement

plant will have a capacity of around 3.3 million tpy and will be located in the

southwest region of the Kingdom. It is expected to be completed by 2008.

36


January, 2008


CHEMICALS AND PLASTICS

Chemicals are the integral components used in a variety of industrial applications

and a number of end-user goods.

Chemicals can be categorized under the following broad categories:

The chief sources of energy used in the production of chemicals are oil and natural

gas. These resources not only enable the operations of the chemical industry but are

also used as feedstocks or raw materials in the production process.

Chemicals produced in large quantities are known as commodity chemicals.

Common examples of these are ethylene, ammonia and chlorine. The production of

these chemicals entails low profit margins as they are produced in bulk, have high

energy requirements and are sold at low prices. On the other hand, chemicals

categorized as fine & specialty chemicals generate higher profit margins in relation

to commodity chemicals as they are produced in smaller quantities and are highly

priced. Fine and specialty chemicals include plastics additives, resins, water, paper

and oil treatments, pigments and dyes, oleochemicals and surfactants, active

pharmaceutical ingredients and agrochemicals.37

Petrochemicals

Petrochemicals are essentially chemicals that are produced from petroleum. Naphtha

is the primary source from which petrochemicals are derived making it the single

most important raw material in the petrochemical industry. The two main classes of

petrochemicals are aromatics (derived from crude oil) and olefins (derived from

37

Cefic: European Chemical Industry Council

• Basic Organics

• Basic Inorganics

• Resins and Plastic Materials

• Man-made Organic Fibers

• Fertilizers Pesticides

• Other Agricultural chemicals

• Pharmaceutical and medicine

• Paints, Inks and Coatings

• Sanitation preparations

• Explosives and miscellaneous

Source: NAICS, Industry Websites, GCG Analysis

Chemical products

have uses in a wide

variety of industrial

applications

Exhibit 4.1: Chemical Industry Categories

January, 2008


natural gas. Examples of aromatics are benzene, toulene and xylenes and examples

of olefins are ethylene, propylene and butylenes.

Plastics

The plastics industry and the chemical industry go together. Plastics, such as

ethylene and propylene, are a downstream product of certain chemicals. Hence, a

number of chemicals producers also produce plastic materials. Plastic materials can

be of two types: thermosetting polymers and thermoplastics. A thermoplastic is a

very soft plastic that can be melted when exposed to high temperatures and frozen

when cooled. A thermosetting plastic is stronger than a thermoplastic and cannot be

recycled as it is non malleable once formed. Because of their strength, such plastics

are best used in construction and automotive industries.

Chemicals and Plastics in the GCC

In the GCC, petrochemicals define the chemical industry and constitute the bulk of

all chemical capacity. Exhibit 4.2 displays the current chemical production capacity

in the region and the capacity once all future projects are complete.

Exhibit 4.2: GCC Annual Chemicals and Plastics Production (Million tons)


GCC chemicals and

plastics capacity will

increase by 80% in

2012 with almost

50% of the increase

coming from Saudi

Arabia

62 mn

2006A

111 mn

2012E

UAE

Oman

Saudi Arabia

Bahrain

Qatar

9.6

17.5

4.7

10.4

1.5

3.3

8.5

40

64

GCC Total

Current Future

4.2

2.8

6.1

Kuwait

January, 2008


Exhibit 4.3 displays the top chemical industry products in the GCC.

21%

18%

17%

15%

10%

6%

4%

3%

3%

2%

Urea

Ethylene

Ammonia

Methanol

Polyethylene

Ethylene Glycol

BTX

Polypropylene

Propylene

Styrene

The graph above shows that urea, ethylene and ammonia comprise the top three

products of the chemical industry in the GCC. Ammonia is produced from methane

which is a principal constituent of natural gas. Urea is used extensively as a fertilizer

and is produced from ammonia. Ethylene or ethene is an olefin (unsaturated

chemical compound) derived from natural gas (ethane) and it is used in the

production of plastics, rubber and dyes. Ethylene is produced via steam cracking of

ethane which means that a saturated hydrocarbon is ‘cracked’ to derive a less

saturated product. More than 50% of global demand for ethylene stems from its role

in the production of polyethylene.38

Shift of Production Assets

Due to the availability of low cost feedstocks in MENA, the rest of the world and

western companies in particular are migrating assets to the region. Through joint

ventures, international companies have established a base in the GCC for the low

cost production of chemicals. For example, Dow Chemical Company is acting as a

foreign partner in the Ras Tanura Integrated Refinery and Petrochemicals Project,

the highest budget project in the GCC, led by the Saudi Arabian Oil Company

(Aramco).

Exhibit 4.4 displays the shift of chemicals production from Western Europe, the U.S.

and Japan to Asia and the Middle East.

38

Shell Chemicals


GCC ethylene

production represents

a significant chunk of

total global

production

Exhibit 4.3: Relative Percentage of Chemical Industry Products in the GCC

January, 2008


According to the above figure, the Middle East currently contributes 4% to world

production and by 2015 it is expected to contribute 10% to world production.

The chemical industry in the GCC has been focused on the production of

petrochemicals and this trend is continuing into the present, with over a hundred

planned petrochemical projects in the GCC. Saudi Arabia is leading the pack with a

share of over 60% from all future planned projects. The bulk of the projects, about

87%, coming on stream are olefins and aromatics production projects.

Exhibit 4.5 displays the share of each GCC state in the number of upcoming

petrochemicals projects.

114

72

8

6

3

13

12

63%

7%

3%5%

11%

11%

Bahrain Kuwait Oman UAE Qatar Saudi Arabia Total

Saudi Arabia has the largest share of petrochemicals projects. Some of the major

projects coming up in the Kingdom are the Saudi Kayan Petrochemicals Complex

and the SABIC – Yansab Olefins Complex.


Exhibit 4.5: GCC Petrochemicals Projects – Regional Breakdown

Saudi Arabia is the

GCC leader in total

number of

petrochemical

projects

Exhibit 4.4: Chemicals Production Shift 2005 vs. 2015

Source: Aker Kvaerner, GCG Analysis

Western

Europe

29%

U.S.

26%

Japan

10%

Asia

9%

Middle East

4%

Eastern

Europe

6%

China

5.5%

Latin

America

5.5%

Others

5%

Western

Europe

20%

U.S.

18%

Asia

15%

China

13%

Middle East

10%

Latin

America

8%

Eastern

Europe

8%

Japan

7%

Others

1%

The Middle East

and the GCC in

particular will play

an increasingly

important role in

the production of

chemicals in the

future

January, 2008


Exhibit 4.6 displays the details for the top 10 projects in the GCC.

Name Yearly Capacity (mn tons) Completion Date Country

SABIC - Yansab Olefins Complex 4 2008 KSA

Equate - Olefins II 2.2 2008 Kuwait

Sohar Aromatics Complex 1 2008 Oman

Saudi Kayan Petrochemical Complex 4 2009 KSA

Fertil - Expansion of Urea Plant 1.04 2009 UAE

Borouge 2 3.1 2010 UAE

Saudi Maaden - Phosphate and Fertilizer Complex 3 2010 KSA

Mesaieed Petrochemical Complex 2.4 2010 Qatar

GPIC - Methanol Plant 1.75 2010 Bahrain

QP/ExxonMobil Petrochemical Complex 2.99 2012 Qatar

Exhibit 4.7 displays the number of chemical companies in each of the GCC states.

66

12

2

9

10

20

22

33%

30%

15%

14%

2%

3%3%

Bahrain Qatar Region-

wide

Kuwait Oman UAE Saudi

Arabia

Total

Chemical companies produce a wide variety of chemicals that are not

petrochemicals. Saudi Arabia has the highest number of chemical companies among

the GCC states and the UAE has the second largest number followed by Oman.

Exhibit 4.8 displays the number of petrochemical companies in each of the GCC

states.



Exhibit 4.6: Top 10 GCC Chemicals Projects

The UAE and Saudi

Arabia have the

highest number of

chemical companies

among GCC member

states

All GCC states have

at least one project

that falls in the top

10

Exhibit 4.7: GCC Chemical Companies Comparison

January, 2008


107

33

6

11

16

22

46

3%3%

6% 10%

15%

21%

43%

Bahrain Region-

wide

UAE Kuwait Qatar Oman Saudi

Arabia

Total

While there are 66 chemical companies, there are over a 100 petrochemical

companies in the GCC. Again, Saudi Arabia is the market leader and has the highest

number of petrochemical producers in the GCC. Oman and Qatar lead the pack after

Saudi Arabia. Although the UAE has 30% of the total number of chemical

companies, it only has 6% of the total number of petrochemical companies in the

GCC.


Saudi Arabia, with its

extensive oil reserves,

has the highest

number of

petrochemical

companies in the GCC

Exhibit 4.8: GCC Petrochemical Companies Comparison

January, 2008



Overview

The UAE has 20 chemical companies and six petrochemical companies. It has 9

olefins and aromatics projects, 2 fertilizer production projects and one refinery

project planned. However, some of these projects are currently on hold or still in the

planning phase. Some of the largest projects are being set up in the Emirate of Abu

Dhabi where 88% of the total value of the annual production of processing industries

comes from chemicals and plastics.39

Exhibit 4.9 displays the projects that are currently underway in the UAE.

Name Yearly Capacity (tons) Completion Date

Fertil - Expansion of Urea Plant 1.04 million 2009

Hamriyah Ammonia and Urea Plant 803,000 2009

Ruwais Melamine Plant 80,000 2009

Borouge 2 3.1 million 2010

Fertil - Ruwais Fertilizer Expansion 129,027 2010

Takreer - Ruwais GAE 600,000 On Hold

Of these projects, Borouge 2, headed by the Abu Dhabi Polymers Company

(Borouge), has the highest capacity. Borouge will also take over the Ruwais

Melamine project. The next two projects with the highest capacities are fertilizer

projects. The Borouge 2 project will comprise of a polyethylene unit and two

polypropylene units.


Current production by chemicals companies stands at 71,000 tpy and production by

petrochemicals companies 23.6 million tpy.

Exhibit 4.10 displays the current and future production of chemicals in the UAE.

39

Gulf News, “Annual output of Abu Dhabi firms reaches Dh91b”, December 2007

Exhibit 4.9: UAE Chemical Projects


The Borouge 2

plastics project in Abu

Dhabi is the largest of

all planned projects in

terms of final capacity

January, 2008



which will result after all planned projects and expansions are complete.

13%

35%

60%

32%

23%

22%

8%

2006A 2010E

Borouge Takreer Fertil Hamriyah Ammonia and Urea Plant

Exhibit 4.10: UAE Chemicals Production (Million tons)


Exhibit 4.11: UAE Chemical Company Market Share Comparison


The UAE’s chemicals

production capacity

will increase by over

100% in 4 years

In the coming years

Borouge will be the

market leader

2006A 2010E

4.7

10.4

Current Future

January, 2008



Exhibit 4.12 displays a matrix of activities.

Company

Oil Refining Petrochemicals Gases Plastics Fertilizers Explosives Other

Borouge ��

Takreer ��

Fertil ��

Petrochem ��

Al Gurg Fosroc ��

Arabex ��

Upstream Downstream


Borouge Projects

1. Borouge 2

The expansion is currently under construction and is scheduled for completion in

2010. The expansion will increase ethylene production from a current 600,000 tpa to

2 million tpa. The project will consist of an ethylene cracker package, a polyolefins

package, an olefins conversion unit and an offsites and utilities package.

2. The Ruwais Melamine Plant

Borouge took over the project from Fertil in April 2007. The plant is expected to be

completed in 2010.

3. Planned Projects

Borouge 3 petrochemicals complex is in its planning phase and will produce

polyolefin plastics by 2013. The Borouge – Base Chemicals complex is undergoing a

feasibility study.

40



Exhibit 4.12: Chemicals Activity Matrix - UAE

Plastics, fertilizers

and a variety of

chemicals are

currently being

produced in the UAE

January, 2008


Bahrain

Overview

Bahrain has one chemical producing company and one petrochemical producing

company. Bahrain also has three petrochemicals projects underway. Exhibit 4.13

displays the projects that are currently planned in Bahrain.


GPIC - Ammonia & Urea Plant n/a 2010

GPIC - Methanol Plant 1.75 million 2010

KFH - Power, Water, Petrcochem 982,000 2010

Two of the projects are expansion projects while one is an integrated power, water

and petrochemicals project.


There is only one company with significant production in Bahrain and that is the

Gulf Petroleum Industries Company (GPIC). Exhibit 4.14 displays the total current

and future annual production of chemicals in Bahrain.

Exhibit 4.13: Bahrain Chemical Projects



GPIC is the main

petrochemicals

company in the

Kingdom of Bahrain

Bahrain’s chemical

production capacity

will increase by 180%

in 4 years

Exhibit 4.14: Bahrain Chemicals Production (Million tons)

4.2

2006A

1.5Current

Future

2010E

January, 2008


The majority of the added future capacity will be in fertilizer products and will result

from GPIC’s two planned projects.



Company


GPIC ��

Upstream Downstream


1. GPIC Petrochemical Complex

GPIC’s petrochemical complex will consist of a menthol plant and a urea and

ammonia plant. The menthol plant will have a capacity of 1.75 million tpy. The

complex is scheduled for completion in 2010 and is currently in the planning phase.

41



Exhibit 4.15: Chemicals Activity Matrix - Bahrain

GPIC currently only

specializes in

downstream products

January, 2008


Qatar

Overview

As mentioned in the earlier sections of this report, the State of Qatar has the world’s

third-largest gas reserves. Given this fact, Qatar has 18 petrochemical, chemical and

related companies. In terms of projects, the State has the second highest share of all

plant projects in the GCC.

Exhibit 4.16 displays the projects planned in the State of Qatar.


Ras Laffan Olefins Cracker (RLOC) 1.3 million 2008

Q-Chem II 695,000 2008

Qafac II - Expansion 2.5 million 2009

Qafco Melamine Plant 60,000 2009

Qafco V 2.2 million 2010

Mesaieed Petrochemical Complex 2.4 million 2010

Qapco 250,000 2010

Tasnee 30,000 2010

QP/Shell Olefins Complex 1.2 million 2011

QP/ExxonMobil Petrochemical Complex 2.99 million 2012

The table above shows that there are 11 projects in Qatar. Many of the projects will

also be producing plastics: Q-Chem II, Mesaieed Petrochemical Complex, Qapco

and QP/ExxonMobil Petrochemical Complex will all be producing various kinds of

plastics. The largest of the projects will be the QP/ExxonMobile Ras Laffan and it

will also take the longest time to complete.


Exhibit 4.17 displays the total current and future annual production of chemicals in

Qatar.


Exhibit 4.16: Qatar Chemical Projects

Qatar has plenty of

high capacity

petrochemicals

projects coming on

stream

January, 2008


Exhibit 4.18 displays change in market share of existing companies which will result

after all planned projects and expansions are complete.

40%

23%

10%

50%

15%

10%

14%

7%

17%

7%

QP/ExxonMobile

Complex

RLOC

QP/Shell Complex

Mesaieed Complex

QAFCO

QAFAC

Q-Chem

2006A

2012E

Qatar Fertilizer Company (QAFCO) currently has the highest market share (50%) in

Qatar. The company has two planned projects – Qafco V and Qafco Melamine plant,

yet the company will lose market share in the coming years due to other larger

Exhibit 4.17: Qatar Chemicals Production (Million tons)



Qatar Chemicals

production will

increase by 82% in

2012

Government owned

holding company

Industries Qatar owns

both QAFAC and

QAFCO

2006A

9.6

Current

Future

17.5

2012E

Exhibit 4.18: Qatar Chemical Company Market Share Comparison

January, 2008


projects. Amongst all the existing players only Qatar Fuel Additives Company

(QAFAC) will gain market share in the future due to the Qafac II Expansion project.

With respect to the future projects, the QP/ExxonMobil Complex is expected to have

the highest market share followed by the Mesaieed Complex. Both complexes will

consist of high capacity plastic producing units.



Company


QAFCO ��

QAFAC ��

QAPCO ��

QP ��

Upstream Downstream


1. QAFCO V

QAFCO currently produces 2 million tpy of ammonia and 3 million tpy of urea. As a

result of the new project total ammonia production will reach 3.8 million tpy and

total urea production will reach 4.3 million tpy. Construction of the project will

begin in 2008 and completion is expected in 2011.

2. QAFCO Melamine Company (QMC)

The project is a joint venture between QAFCO and Qatar Intermediate Industries

Holding Company (QH). The QMC plant will produce 60,000 tpy of melamine and

will use QAFCO urea as a feedstock in the production process. QMC will be the

largest melamine plant in the Middle East and the second-largest in the world. The

plant is expected to start production at the beginning of 2009.

3. Ras Laffan Petrochemical Complex

This is a project of Qatar Petroleum (QP) and ExxonMobil Chemical Company. The

former has a 51% share and the later has a 49% share. The project will consist of:

• A 1.3 million tpy ethane/propane cracker

• A 570,000 tpy linear low density polyethylene (LLDPE) unit

• A 420,000 tpy linear density polyethylene (LDPE) unit

• A 700,000 tpy ethylene glycol (EG) unit

The ethylene cracker will be a major source of feedstock for the Qatofin and Q-

Chem II projects. The project is expected to start production in 2012.

42


Exhibit 4.19: Chemicals Activity Matrix - Qatar


Chemical companies

in Qatar produce a

variety of chemicals

and chemical products

January, 2008


4. Qatofin Polyethylene Plant

Qatofin, a project of the Qatar Petrochemical Company (QAPCO) and Total of

France, will produce 450,000 tpy of linear low density polyethylene (LLDPE). This

will increase total capacity from 360,000 to 800,000 tpy. The project is expected to

start production at the end of 2008.

5. Q-Chem II

The Q-Chem II project is an expansion of the current Q-Chem infrastructure. The

facility will consist of a high-density polyethylene (HDPE) and alpha olefins plant

with capacities of 350,000 tpy and 345,000 tpy respectively. Total HDPE production

will increase from 450,000 tpy to 800,000 tpy as a result of the expansion. The

project is expected to start production at the end of 2008.

6. Qatar Petrochemicals Complex (QPCC)

QPCC is a joint venture between Qatar Holding Intermediate Industries Company

and Honam Petrochemical Company of South Korea. The complex will produce:

• 180,000 tpy of propylene

• 700,000 tpy of polypropylene

• 380,000 tpy of styrene

• 220,000 tpy of polystyrene

• Over 250,000 tpy of aromatics (xylenes)

The project is expected to start production in 2010.

January, 2008


Oman

Overview

Oman has 1 fertilizer company, 10 chemical companies and 22 chemical and

petrochemical companies, the second most in the GCC after Saudi Arabia. Exhibit

4.20 displays the future projects in Oman.


SIUCI - Urea and Ammonia Project 2 million 2007

Sohar Aromatics Complex 1 million 2008

Octal Plastics Plant 300,000 2008

Salalah Methanol Plant 1.1 million 2010

OMC - Sohar Menthol Plant 1.1 million n/a

OPIC Sohar Olefins Complex 1 million n/a

A few planned projects are on hold due to rising costs while others are on schedule.

For example the Oman Industries Petrochemical Company (OPIC) project is on hold

due to increased costs.


Exhibit 4.21 displays the current and future production of chemicals in Oman.

Exhibit 4.21: Oman Chemicals Production (Million tons)


Exhibit 4.20: Oman Chemicals Projects


Oman is establishing

its footprint in the

chemicals and plastics

industry

By 2010, Oman’s

chemical production

will increase by

almost 160% 3.3

8.5

Current Future

2010E2006A

January, 2008




34%

4%

1%

87%

10%

2%

13%

13%

24%

12%

SIUCI Project

Salalah Methanol Plant

OMC Plant

Sohar Aromatics

Complex

Oman India Fertilizer

Company

Oman Propylene

Oman Chlorine

2006A

2010E



Company


Oman Chlorine ��

OMIFCO ��

Upstream Downstream

Major Up and Coming Projects

43

1. Sohar Aromatics Complex

The complex is a joint venture between the Oman Oil Company (OOC), Oman

Refinery Company and LG International Corporation of South Korea. The complex

will consist of:

• A 790,000 tpy paraxylene unit

• A 210,000 tpy benzene plant

43


Exhibit 4.22: Oman Chemical Company Market Share Comparison


Exhibit 4.23: Chemicals Activity Matrix – Oman


OMIFCO, part of the

Oman Oil Company,

currently has the

highest market share

OMIFO is the market

leader in Qatar

January, 2008



2. Salalah Menthol Plant

The plant is a project of the OOC and will produce 1.1 million tpy of menthol. The

plant will also have a power plant, water desalination units, a water treatment plant

and export facilities. The project is expected to start production in 2010.

3. SIUCI – Urea and Ammonia Project

Sohar International Urea and Chemical Industries (SIUCI) is constructing a fertilizer

complex which will produce 730,000 tpy of Urea and 1.3 million tpy of ammonia.


4. Octal - Integrated PET Resin and APET Plant Expansion

Octal Holding is constructing a plastics complex which will produce 300,000 tpy of

APET bring total capacity of APET to 330,000 tpy. The project is expected to start

production in 2008.

January, 2008


Kuwait

Overview

Compared to other industries, Kuwait has a relatively healthy chemical sector due to

abundant oil reserves. The nature of the chemical industry in Kuwait is that there are

a few parent companies with a number of subsidiaries and all the parent companies

own a share in the other parent companies and/or their subsidiaries. The major

companies are Petrochemical Industries Company (PIC) which is the sixth largest

petrochemical company in the GCC in terms of current owned capacity, Boubyan

Petrochemical Company (BPC) and Qurain Petrochemicals Industry Company which

rank as 16th

and 18th

respectively.44

There are 9 chemical companies and 11 refining and petrochemical companies in

Kuwait. Kuwait’s share in the GCC’s chemical projects is quite low (5%), however it

has 2 major petrochemical projects on the way which will more than double current

capacity. Exhibit 4.24 displays the two major projects coming up in Kuwait.

Name Yearly Capacity (mn tons) Completion Date

Equate - Olefins II 2.2 2008

Shuaiba Aromatics 1.1 2009

The Equate Olefins II project is considered the sister company of EQUATE

Petrochemical Company. The Dow Chemical Company and Petrochemical Industries

Company own 85% of the shares while Boubyan Petrochemical Company and

Qurain Petrochemical Industries Company own the remaining shares.

44

Zawya, Industry Insight Petrochemicals, 2006

Exhibit 4.24: Kuwait Chemicals Projects


EQUATE is planning

the largest project in

Kuwait

January, 2008



Exhibit 4.25 displays the current and future production of chemicals in Kuwait.



13%

6%

2%

1%

29%

12%

5%

3%

18%

59%

51%

Shuaiba Aromatics

EQUATE

PIC

PCI

BPC

QPIC

2006A

2009E


Exhibit 4.25: Kuwait Chemicals Production (Million tons)


By 2009, Kuwait’s

chemical production

will increase by more

than 100%

EQUATE is by far the

market leader in the

production of

chemicals in Kuwait

Exhibit 4.26: Kuwait Chemical Company Market Share Comparison

6.1

2006A

2.8

Current

Future

2009E

January, 2008


Although BPC, PIC and QPIC market share will decrease in the future, they all own

shares in EQUATE which is the main chemical producer now and will continue to be

so in the future. Dow Chemicals also owns shares in EQUATE and its related

projects.



Company


EQUATE ��

PIC ��

Upstream Downstream


EQUATE Olefins II

The Olefins II project will produce the following:

• 850,000 tpy ethylene

• 225,000 tpy polyethylene

• 600,000 tpy ethylene glycol

• 450,000 tpy styrene monomer


Shuaiba Aromatics

The project is a joint venture between Petrochemical Industries Company (PIC) and

Al Qurain Petrochemical Industries Company. The aromatics complex will consist of

a paraxylene unit with a capacity of 770,000 tpy and a benzene unit with a capacity

of 330,000 tpy. The project is expected to start production in 2009.

45


Exhibit 4.27: Chemicals Activity Matrix - Kuwait


PIC owns 42.5%

interest in EQUATE

January, 2008


Saudi Arabia

Overview

Saudi Arabia has the highest number of chemical and petrochemical companies as

well as future planned projects in the GCC. Exhibit 4.28 displays some of the biggest

planned chemical projects in the Kingdom.

Name Yearly Capacity (mn tons) Completion Date

SABIC - Yansab Olefins Complex 4 2008

Sharq - Petrochemical Expansion 2.8 2008

Sahara/Tasnee - Jubail Olefins Complex 2.1 2008

Saudi Kayan Petrochemical Complex 4 2009

Petro Rabigh Refining and Petrochemical Complex 2.4 2009

Saudi Maaden - Phosphate and Fertilizer Complex 3 2010

Sadaf - Jubail 2 Petrochemical Complex 1 2011

Ras Tanura Integrated Refinery and Petrochemicals Complex 2.5 2012

Sipchem Jubail Phase 3 Polyolefins Complex 2.2 2012

The chemical industry in the Kingdom has primarily operated under one main

company – the Saudi Basic Industries Company (SABIC). SABIC has a major share

in the largest up and coming projects which will enable the company to maintain its

market share. However, new players such as the Saudi International Petrochemical

Company (SIPCHEM) and the Sahara Petrochemical Company are entering the

market.


Exhibit 4.29 displays the current and future production of chemicals in Saudi Arabia.



Exhibit 4.28: Saudi Arabia Chemical Projects

Exhibit 4.29: KSA Chemicals Production (Million tons)

The KSA’s chemical

production will

increase by 60% in

2012

40

64

2006A 2012E

Current Future

January, 2008




57%

12%

11%

8%

6%

4%

4%

4%

3%

36%

8%

9%

5%

Saudi Kayan

Saudi Maaden

Sharq Exp.

Ras Tanura

Petro Rabigh

Sabic

Yanpet

Sadaf

Saudi Methanol

2012E

2006A

SABIC currently has the highest market share among chemical producers in Saudi

Arabia and will have an even greater market share in the future as the company has

significant stakes in a majority of other companies and their related projects. For

example, SABIC has a significant stake in the Saudi Kayan, Yansab and Maaden

projects. Although the graph does not show this link, this is the reality of the

chemicals industry in the Kingdom.


1. Saudi Kayan Petrochemical Complex

The project is a joint venture between SABIC and Al Kayan Petrochemical

Company. Production is expected to be 4-5 million tpy of ethylene and various

finished products. The project is expected to start production in 2009.

2. SABIC – Yansab Olefins Complex

The complex will have an output of 4 million tpy of petrochemical products

including ethylene, high-density polyethylene (HDPE), propylene, aromatics and

others. The project is expected to start production in 2008.

3. Saudi Maaden – Phosphate and Fertilizer Complex

The complex is a joint venture between SABIC and Saudi Arabian Mining Company

(MAADEN). The project has access to a phosphate mine with a mineable capacity of

46



Exhibit 4.30: KSA Chemical Company Market Share Comparison

SABIC is one of the

world leaders in

chemical production

January, 2008


1.6 billion tons. The project will have a production of 3 million metric tpy of

diammonia phosphate fertilizers. The project is expected to start production in 2010.

4. Sharq – Third Petrochemical Expansion

The project is a joint venture between SABIC and Saudi Petrochemical Development

Company Ltd. The expansion will add 2.8 million tpy of petrochemical products

making Sharq the world’s largest producer of ethylene glycol. The project is

expected to start production in 2008.

5. Petro Rabigh Refining and Petrochemical Complex

The project is a joint venture between Saudi Arabian Oil Company (ARAMCO) and

Sumitomo Chemical Company of Japan. The complex will consist of a 1.3 million

tpy ethylene cracker and related downstream units with a capacity of 2.4 million tpy

of petrochemical products including 900,000 tpy of propylene. The complex will

also expand existing Rabigh oil refining capacity. The project is expected to start

production in 2008.

January, 2008


APPENDIX A – KEY COMPANY OVERVIEWS

Aluminum

DUBAL

Senior Management

Position Name

Chairman H H Sheikh Hamdan Bin Rashid Al Maktoum

Vice Chairman H E Ahmed Humaid Al Tayer

Managing Director Mohammed Abdulla Al Ghurair

Director Abdulla Salem Mohammad Al Mana

Director Abdul Wahed Mohammad Al Fahim

Director Hilal Khalfan Bin Dhaher

Director Saeed Mohammed Ahmed Al Tayer

Director Tariq Hussein Khansahebb

CEO Abdullah Kalban

CFO Tony C Sole

Ownership

The Government of Dubai owns 100% of DUBAL.

Key Activities

With over 3000 employees, the UAE’s largest producer is the state-owned Dubai

Aluminum Company (DUBAL). It is located in the emirate of Dubai and has been

operational since 1979. By 2008 production capacity will have increased from a

current 881,000 metric tons to 920,000 metric tons per annum. Production for the

year 2006 was 861,000 tons.

Dubal exports 92% of the aluminum it produces. Most of the aluminum produced by

Dubal is exported to over 280 customers in 44 countries in the Far East, Europe, the

ASEAN region, the Middle East and Mediterranean region, and North America.

Exhibit 5.1: DUBAL Senior Management


January, 2008


Gulf Extrusions

Senior Management

Position Name

Chairman Saif Ahmad Al Ghurair

Managing Director Majid Saif Al Ghurair

General Manager Modar Mohammed Al Mekdad

Director of Sales and Marketing Robert Holtkamp

Ownership

Gulf Extrusions is owned by the Al Ghurair Group.

Key Activities

Located in Jebel Ali Free Zone, the plant produces aluminum sections in mill, silver

and color anodized, gold dyed and powder coated finishes. Most of company’s

production, 70%, is used locally in construction sector. The rest is exported to

markets in South East Asia, the GCC countries, Europe and Canada.

With the establishment of primary production facilities, other aluminum related

facilities have also been created. Catering to the high demand for extruded products

in the UAE, Gulf Extrusions, which was established in 1978, produces 65,000 tons

of extruded products per year. It is located in Jebel Ali in proximity to DUBAL

which supplies raw materials to the company. Most of what the company produces,

almost 70%, is consumed locally. A recent expansion will enable a capacity increase

of over 25,000 tons bringing total capacity to over 90,000 tons.

Exhibit 5.2: Gulf Extrusions Senior Management


January, 2008


ALBA

Senior Management

Position Name

Chairman Dr Issam Fakroo

Deputy Chairman Nader K. Al Moayyed

Director Fawzi Ahmed Kanoo

Director Shaikh Mohammed bin Khalifa bin Ahmed Al Khalifa

Director Osama Mohammed Al Orayidh

Director Mahmood Hashim Al Koheji

Director David Meen

Director Mohammed H. Al Mady

Director Mutlaq H. Al Morished

Director Mohammed S. Al Jaber

Director Gert Rohrseitz

CEO Ahmed Saleh Al Noaimi

Deputy Chief Executive Mahmood M. Daylami

Ownership

Government of Bahrain

77%

SABIC

20%

Breton Investments

(Germany)

3%

Key Activities

ALBA was formed in 1968, in line with the Government of Bahrain’s strategy and

desire to develop sources of income other than oil. The company offers high quality

products with metal purity levels at 99.88%. The company’s production is being

exported to more than 25 countries across the world and has even been used to build

Mars explorer. Since 2005, with its expansion project, Line 5, (which is the longest

reduction line in the world) the company’s total annual production capacity has

expanded to more than 830,000 tones. ALBA is currently ranked as the eighth largest

producer of aluminum in the world. Production in 2006 was 872,388 tons.

Exhibit 5.4: ALBA Ownership Structure


Exhibit 5.3: ALBA Senior Management


January, 2008


Gulf Aluminum Rolling Mill Company (GARMCO)

Senior Management

Position Name

Chairman Sheikh Ibrahim Bin Khalifa Al-Khalifa

Vice Chairman Ebrahim Bin Saad Al-Showair

Director Salem Bin Nasser Al-Ismaily

Director Abdul-Rahman Al-Shaibi

Director Aref Saleh Khamis

Director Faisal Hamad Al-Roomi

Director Ibtehal Abdulla A. Al Nesuf

Director A.Aziz Bin Sulaiman Al-Humaid

CEO Adel Hamad A. Rahman Hamad

CFO Zakareya A.Rahim Buallay

Ownership

State of Bahrain

39%Industrial Bank of

Kuwait

17%

Republic of Iraq

4%

Gulf Investment

Corporation

5%

Sultanate of Oman

2%State of Qatar

2%

SABIC

31%

Key Activities

The company began operations in 1986 and now produces 160,000 tons of aluminum

foil, coils, sheets and circles annually. The company’s flat rolled aluminum products

are in demand from the construction companies in the region. ALBA is GARMCO’s

key supplier and all ALBA’s aluminum slabs are used by GARMCO. GARMCO

produced 160,000 tons of rolled aluminum in 2005 and upgraded its foil mill

capacity to 35,000 tons in 2006.

Exhibit 5.5: GARMCO Senior Management


Exhibit 5.6: GARMCO Ownership Structure


January, 2008


Midal Cables

Senior Management

Position Name

Chairman Khalid Rashid Al Zayani

Vice Chairman Dr. Waheeb Linjawi

Director Hamid Rashid Al Zayani

Director Zayed Rashid Al Zayani

Director Mohammed Al Attass

CEO Salman Abdullah Al Shaikh

Managing Director Hamid Rashid Al Zayani

Ownership

Al Zayani

Investments

50%

Saudi Cable

Company

50%

Key Activities

Midal was established in 1977 and during the 30 year time span of operations, its

annual production capacity has reached 150,000 metric tones. The company’s

products include aluminium alloy rods, wires, overhead line conductors, aluminum

clad steel wires and extruded products. Most of the production is exported

worldwide. The Gulf Electrical Transmission Network (GETN) project has boosted

the regional demand for aluminum products in the GCC and is Midal’s key

customer.

Exhibit 5.7: Midal Cables Senior Management


Exhibit 5.8: Midal Cables Ownership Structure


January, 2008


Aluminium Products Company Ltd. (ALUPCO)

Senior Management

Position Name

Chairman Hashim Saeed Hashim

Director Lubna Suleiman Olayan

Director Abdullah Abu Hamdan

General Manager Ibrahim Al Rashy

Finance Manager Akhtar Ali

Ownership

Olayan Saud i

Inves tment Company

2% Trad ing and Ind us t rial

Group (Ho ld ing )

6 %

Olayan Financing

Comp any

2 8%

Badad International

Company

30%

Hashim Saeed Hashim

34 %

Key Activities

The company was established in 1975 and operates two plants in the Kingdom, one

in Damman and one in Jeddah. ALUPCO specializes in aluminium extrusions and

surface treatments. Its total annual capacities are:

• 65,000 metric tons of aluminium profiles in mill finish.

• 12,000 metric tons of anodized profiles.

• 1,500 metric tons of brightened profiles.

• 33,000 metric tons of coated profiles.

Exhibit 5.9: ALUPCO Senior Management

Exhibit 5.10: ALUPCO Ownership Structure



January, 2008


Steel

Al Nasser Industrial Enterprise (ANIE)

Senior Management

Position Name

Chariman Abdullah Nasser Hawaileel Al Mansoori

President Hilal Nasser Hawaileel Al Mansoori

CEO Sanjay Mehta

Ownership

Al Nasser Industrial Enterprise is fully owned by Al Nasser Holdings.

Key Activities

The group has three steel-related entities under its wing, namely, Gulf Industries

Company, Euro Gulf Steel Industries and Emirates Steel Establishment. In 1992, the

Gulf Steel Industries Company, which produces rebar and welded mesh, was the first

of the three to be established. Products of all three entities are produced using scrap

metal, however, a sponge iron facility is being set up to reduce the dependency on

scrap.

Emirates Steel Establishment produces 60,000 tons of ingots and 240,000 tons of

billets and Gulf Steel Industries produces 120,000 tpy of deformed bars, 36,000 tpy

of cold ribbed bars and 30,000 tpy of welded mesh. ANIE is planning the ANIE

Steel Complex which will have a capacity of 350,000 tpy and will be completed by

2008.

Exhibit 5.11: ANIE Senior Management


January, 2008


Emirates Steel Industries (ESI)

Senior Management

Position Name

Chariman Hussein Jassim Al Noweis

Director Soheil Mubarak Al Ameri

Director Ahmad Soheil Al Muheiri

Director Abu Bakr Sediq Khoury

Director Dhafer Ayed Al Ahbabi

Acting CEO Jim White

VP, Finance Steven Pop

Ownership

Emirates Steel Industries is owned by Abu Dhabi Basic Industries Corporation.

Key Activities

ESI is a subsidiary of General Holding Corporation and was formerly known as

Emirates Integrated Steel Factory (EISF). The company operates a rolling mill to

produce reinforcement bars for the construction industry. The company produced

600,000 tons of rebar in 2006 and is currently undergoing a major expansion project

in order to become the first steel making facility in the GCC. The expansion is

valued at USD 900 million and output is expected to increase to 2 million tpy by

2010.

Exhibit 5.12: ESI Senior Management


January, 2008


Alam Steel Industries Company (ASI)

Senior Management

Position Name

Chairman Shyam Bhatia

Director Vikram Bhatia

General Manager Naraani Ved

Financial Controller R Mahalingam

Finance Manager Mahali Van

Ownership

ASI is fully owned by Alam Group.

Key Activities

Alam Steel was founded in 1979 in Dubai. The company caters to the demand for

rebar in the construction industry. The company expects rebar consumption to grow

20% per annum for the next three years and current production capacity is 300,000

tpy of rebar.

Exhibit 5.13: ASI Senior Management


January, 2008


Gulf Industrial Investment Company (GIIC)

Senior Management

Position Name

Chairman Abdalla H Nour

Vice Chairman Khaled Al Qadiri

CEO Dr Ali Basdag

GM, Admin. And Communications Sayed Karam

GM, Technical Affairs Paul Livel

Finance Manager Issam Al Othman

Ownership

Gulf Inves tment Cor por ation

71%

Qatar Steel Company

24%

Kuwait Foundr y Company

5%

Key Activities

The company operates an iron ore pelletizing plant in Bahrain with an annual

capacity of 4 million tpy of iron ore pellets. The company is spearheading Bahrain’s

two steel projects which are also some of the largest planned steel projects in the

GCC. The projects, namely, GIIC Iron Ore Pellet Plant and the GIIC Steel Complex,

will have a combined capacity of 9 million tons to be added by 2010.

Exhibit 5.14: GIIC Senior Management


Exhibit 5.15: GIIC Ownership Structure


January, 2008


Qatar Steel

Senior Management

Position Name

Chariman HH Youssef Hussein Kamal

Vice Chairman Mohammed Saleh Al Sada

Director Nasser Mubarak Al Shefy

Director Fahed Hamad Al Mohannady

Director HH Nasser Bin Hamad Al Thani

Director Abdulrahman Ahmad Al Sheeby

Director Mohammed Al Hitmy

Board Secretary Dr Idris Ibrahim

General Manager HH Nasser Bin Hamad Al Thani

Finance Manager Reemi Maseeh Rouhani

Ownership

Qatar Steel is wholly owned by Industries Qatar.

Key Activities

Qatar Steel (formerly QASCO) was established in 1974 in the Mesaieed Industrial

City and prides itself on being the first integrated plant in the Arabian Gulf. Steel

production started in 1979 and the company produces 1.2 million tpy of molten steel

and 740,000 tpy of plain and deformed bars. Plant facilities include a Combo Mega

Module, Electric Arc Furnaces, a Continuous Casting plant and Rolling Mills. A

Main Power Substation and facilities for sea/fresh water, compressed air, and natural

gas are also included.

A branch of Qatar Steel, Qatar Steel Company FZE was established in 2003 in the

Dubai’s Jebel Ali Free Zone. The company operates a wire rod mill and rebar mill

with capacities of 240,000 metric tons and 50,000 metric tons respectively. The

company caters to demand within the GCC as well as international markets.

Exhibit 5.16: Qatar Steel Senior Management


January, 2008


Sharq Sohar Steel Rolling Mills (Sohar Steel)

Senior Management

Position Name

Chairman Jamil Ali Sultan

General Manager Vinod Bihari

Ownership

The company is owned by Middle East Traders (Oman).

Key Activities

Sohar Steel was established in Oman in 1995 and is strategically located in the Sohar

Industrial Estate area with additional offices in the UAE and KSA. The company

produces rebar via imported steel billets and has an annual capacity of 250,000

metric tons. Sohar Steel is currently adding a steel making unit for producing

continuous cast steel billets.

Exhibit 5.17: Sharq Sohar Steel Rolling Mills Senior Management


January, 2008


Al Jazeera Steel Products Company

Senior Management

Position Name

Chairman Khalil Abdullah Mohammed Al Khonji

Vice Chariman Mohammed Abdullah Moosa

Director Yousef Al Harthy

Director Mukesh Sawhney

Director Rajeev Kulkarni

Director Shailesh Kumar Dash

CEO Sunil Gupta

Finance Manager P Finket

Ownership

Glo ba l Inves tment

Ho us e [via Glo ba l

Buyo ut Fund]

51%

P ublic

28%

Abja r Trading

Co mpany

6%

Mo o s a Abdul

Rahman Has s an and

Co mpany

9%

Abdullah Mo o s a

Abdulrahman

6%

Key Activities

The company, formerly known as Jazeera Tubes, is a manufacturer of steel and

galvanized tubes that exports its products to 25 countries including Australia and

those in North America and Europe. The company has a capacity of 300,000 tpy of

pipes.

Exhibit 5.18: Al Jazeera Steel Products Co. Senior Management


Exhibit 5.19: Al Jazeera Steel Products Co. Ownership Structure


January, 2008


United Steel Industrial Company

Senior Management

Position Name

Chairman Awad Al Khaledi

Vice Chairman A F Vardinejad

Director Dr Iraj Akbarieh

Director Adnan Abdulnabi Al Moosa

Director Abdulwahid Al Awadi

Director Ahmad Katani

Director Abdulrahman Ali

Ownership

Kuwaiti investors

51%

National Iranian Steel

Company

49%

Key Activities

The company was established in 1996 as a joint venture between Kuwaiti investors

and a German company. The company has a rolling mill factory and is the only

manufacturer of rebar in Kuwait. Plant capacity is 600,000 TPY.

Exhibit 5.20: United Steel Industrial Co. Senior Management


Exhibit 5.21: United Steel Industrial Co. Ownership Structure


January, 2008


Al Oula Steel Manufacturing Company (Al Oula)

Senior Management

Position Name

Chairman Hussein Al Kharafi

Vice Chairman Ahmad Al Kharafi

General Manager Fahed Al Jouan

Finance Manager Ahmad Al Kharafi

Ownership

Al Oula Co. is privately owned by Fahed Al Jouan and Hussein Ali Kharafi.

Key Activities

Al Oula was established in 2002 and is located in the Shuaiba Industrial Area. The

company has an annual production capacity of 500,000 tons of steel billets.

Exhibit 5.22: Al Oula Co. Senior Management


January, 2008


Kuwait Reinforced Steel Manufacturing Company

Senior Management

Position Name

Chairman Ali Hassan Al Sarraf

Vice Chairman Alaa Al Sarraf

Director Mohammed Al Sarraf

Director Abdulaziz Al Sarraf

Director Fahed Al Sarraf

Director Jaber Al Sarraf

CEO Mustafa M Haidar

CFO Alaa Al Sarraf

Ownership

The company is privately owned by Ali Al Sarraf International Group Company.

Key Activities

The company was established in 2002 and has a capacity to produce 150,000 metric

tpy of steel bars. As a result of an expansion project which started last year, the

company’s steel bar production capacity is expected to reach 400,000 tons sometime

in 2007.

Exhibit 5.23: Kuwait Reinforced Steel Manufacturing Co. Senior

Management


January, 2008


Saudi Iron and Steel Company (HADEED)

Senior Management

Position Name

Chairman Mansour Bin Saleh Al Kharboosh

Director Mohammed Bin Abdulaziz Al Rayes

Director Abdulrahman Bin Abdullah Abu Ali

Director Khaled Bin Saleh Al Torairy

Director Abdullah Bin Khalifa Abu Ayanaya

Director Hesham Bin Abdullatif Al Hamaly

President Abdulaziz Bin Suleiman Al Homayel

Ownership

HADEED is wholly owned by Saudi Basic Industries Corporation (SABIC).

Key Activities

HADEED is the first integrated steel plant in Saudi Arabia and was established in

1983. The company operates three factories in the Kingdom and produces

commercial and reinforcement steel. The company operates a flat products facility

and a long products complex. The former has a capacity of 2 million tpy and the

latter produces 1.2 million tons of rebar and 700,000 tons of rods annually.

HADEED is planning to upgrade their long products output to 3 million tons

annually and this will comprise 60 percent of the company’s output.

Exhibit 5.24: HADEED Senior Management


January, 2008


Al Ittefaq Steel Products Company (ISPC – Dammam)

Senior Management

Position Name

Chairman Hilal Hussein Al Tuwairqi

Vice Chairman Mohammed Tariq Barlas

Director Khaled Hilal Al Tuwairqi

Director Youssef Hilal Al Tuwairqi

Director Abdullah Hilal Al Tuwairqi

CEO Mohammed Tariq Barlas

CFO Shibbir Hussein Raffiqi

COO Imran Agha

Ownership

Saudi Arabia’s Al Tuwairqi Group owns 76.9% of ISPC and Bahrain’s Gulf

International Bank owns 1.7% of the company. The remainder of ownership

privately lies with Abdullah Al Jaber, Ali Hussein Al Hadat, and Hamad Al

Suleiman.

Al Tuwairqi Group

75%

Private Investors

23%

Gulf Intl. Bank

2%

Key Activities

Al Ittefaq Steel Products Company is the flagship company of the Al Tuwairqi

Group. The company specializes in the production of hot-rolled steel rebar.

Production is over 1 million metric tons per annum.

Exhibit 5.25: ISPC Senior Management


Exhibit 5.26: ISPC Ownership Structure


January, 2008


Al Rajhi Steel Industries

Senior Management

Position Name

Chairman Mohammed Abdulaziz Al Rajhi

Acting President Khaled Abdulhamid Al Suleimani

Vice President,Material Handling Mehdi Naser Al Qahtani

Vice President,Operations Ahmad Abdulrahman Al Amoudi

Ownership

Mohammed Abdulaziz Al Rajhi and sons privately own the company.

Key Activities

Rajhi Steel was established in 1984 by Sheikh Al-Rajhi. Products include various

kinds of commercial steel products (coils, tubes, sheets) and 500,000 tons of rebar

each year from the Al Aseemah factory.

Exhibit 5.27: Al Rajhi Steel Industries Senior Management


January, 2008


United Gulf Steel Mill Company (UGSM)

Senior Management

Position Name

Vice Chairman Mazen K Allahiq

Managing Director Mazen K Allahiq

General Manager Anan Gopal

CFO Dilip George

Ownership

UGSM is privately owned by Mazen Al Lahiq and the Mazrui Holding Company.

Key Activities

UGSM is the only manufacturer of hot rolled medium section structural steel

products in the GCC. The company is located in Jubail Industrial City. The rolling

mill capacity is 450,000 metric tons per annum.

Exhibit 5.28: UGSM Senior Management


January, 2008


Hidada

Senior Management

Position Name

Chairman Khaled Ahmad Youssef Zainal Alireza

Director Mohammed Ahmad Youssef Zainal Alireza

Director Youssef Ahmad Youssef Zainal Alireza

Director Adnan Mamani

President and COO Adnan Abduljaleel Abduljawad

VP, Finance and Admin. Mohammed Mashhoud

VP, Structural Steel Dawood Khumais

VP, Sales and Marketing Nabeel Hamshari

VP, Support Services Ahmad Saim Al Dahr

Ownership

Xenel Industries

95%

Xenel Marketing

5%

Key Activities

Hidada was formed in 1982 and is owned by Xenel Indsutries, a KSA-based

industrial conglomerate. Hidada has 6 factories in the Jeddah Industrial Area and is

involved in the design, engineering and fabrication of structural steel products.

Production of steel is 184,000 tpy.

Exhibit 5.29: Hidada Senior Management


Exhibit 5.30: Hidada Ownership Structure


January, 2008


Universal Metal Coating Company (UNICOIL)

Senior Management

Position Name

Chairman Fahad Abdullah Al Zamil

Vice Chairman Abdulrahman Al Rashed

Director Fahad Z Al Thukair

President Fahad Z Al Thukair

General Manager Babandra Duo

General Manager, Marketing Ahmad Shaaban

General Manager, Admin and IT Adnan Abdullah Ali

Finance Manager Mounir Zaidi

Strategic Planning Manager Shaker Al Mousa

Ownership

Rashed Al Rashed and

Sons Group

50%

Zamil Group Holding

Company

50%

Key Activities

UNICOIL was formerly known as the BHP Unicoil Company and was established in

1997. Production is 370,000 tpy of galvanized and pre-painted steel.

Exhibit 5.31: UNICOIL Senior Management


Exhibit 5.32: UNICOIL Ownership Structure


January, 2008


Cement

Union Cement

Senior Management

Position Name

Chairman Sheikh Saqr Bin Khalid H Al Qassimi

Vice Chairman Sheikh Taleb Bin Saqr Al Qassimi

Vice Chairman Abdullah Mohammed Saeed Al Sayyah

Director Sheikh Rami Khalid Abdullah Al Qassimi

Director Abdullah Ahmad Rashed Nuaimi

Director Mussabah Khamees Al Mazroui

Director Ahmad Hamdan Malek

Managing Director Abdullah Mohammed Saeed Al Sayyah

General Manager Magnus Dallen

Finance Manager Roar Nordkvelle

Ownership

Go vernment o f Ras Al

Khaim ah

41%

Abu Dhabi Inves tment

Autho rity

20%

Khalid Abdullah Al Qas imi

20%

P ublic

19%

Key Activities

The company is the UAE’s first cement producer. It started production in 1975 and is

located in RAK. Production capacity currently stands at 4.2 million tons per year of

Portland cement after the company recently added a 10,000 tpy production line.

Exhibit 5.33: Union Cement Senior Management


Exhibit 5.34: Union Cement Ownership Structure


January, 2008


Gulf Cement Company

Senior Management

Position Name

Chairman Sheikh Omar bin Saqr Al Qasimi

Vice Chairman Hamad Ahmad Al Omairi

Director Sheikh Muntaser bin Khaled Al Qasimi

Director Sheikh Jamal bin Saqr Al Qasimi

Director Salem Abdullah Salem

Director Ibrahim Mansour Rajhi

Director Abdulaziz Hamad Al Wonayis

Director Abdulaziz Saad Abdulaziz Al Rashed

General Manager Ahmad Abdullah Al Amash

Finance Manager Ahmad Mansour

Ownership

Public

51%

NIC Kuwait

27%

Private Investor

9%

RAK Government

7%

Banque Saudi Fransi

6%

Key Activities

Gulf Cement is located in Ras Al Khaimah and started production in 1989. The

company produces both cement and clinker in quantities of 2.5 million tons and 1.3

million tons per year respectively. In 2005, the company added a new clinker

production line with a capacity of over 2.3 million tons per year. The company

produces four types of Portland cement and one type of slag. A variety of fuels are

used in production.

Exhibit 5.35: Gulf Cement Company Senior Management


Exhibit 5.36: Gulf Cement Company Ownership Structure


January, 2008


Emirates Cement Factory (ECF)

Senior Management

Position Name

General Manager Mohsen Hamad Al Marri

Technical Manager Abdulaziz Mohammed Asad

Admin. Manager Saleh Salem Al Kindy

Financial and Commercial Manager Yahya Suleiman Al Ameri

Production Manager Abdulrahman Abdulal

Ownership

Emirates Cement Factory is owned by Arkan Building Materials Company.

Key Activities

The Emirates Cement Factory is part of the Arkan Building Group, which owns

Emirates Cement Factory and Emirates Concrete. Emirates Cement Factory initiated

production in 1976. The factory has production capacities of 813,000 tons of clinker

and 1.2 million tons of cement per year. The factory is located in the Al Ain area of

Abu Dhabi where limestone deposits are available. Al Ain Cement Factory, which

will produce 3.1 million tons of clinker, is a current expansion project of the

company.

Exhibit 5.37: ECF Senior Management


January, 2008


Bahrain Precast Concrete Company (BPC Group)

Senior Management

Position Name

Chairman Ahmad Ali Al Aali

Director Hani Hassan Al Aali

Director Adel Hassan Al Aali

General Manager Goran Hogberg

Finance Manager K Divakaran

Ownership

Haji Hassan Group wholly owns Bahrain Precast Concrete Company.

Key Activities

The Bahrain Precast Concrete Group was established in 1977 and is owned by the

Haji Hassan Group which specializes in a variety of trading activities. The associated

companies of the group are BPC Bahrain, United Precast Concrete (UPC) Dubai,

UPC Abu Dhabi and UPC Qatar. BPC Bahrain began operations in 1978 and was the

first company of its kind in the country. The company produces concrete and precast

products such as hollow core slabs, panels, facade elements, boundary walls, etc.

Exhibit 5.38: BPC Group Senior Management


January, 2008


Qatar National Cement Company (QNCC)

Senior Management

Position Name

Chairman Salem Butti Al Nuaimi

Vice Chairman Khalil Ibrahim Redwani

Director Abdulaziz Bin Jassim Al Thani

Director Bader Ahmad Al Qayed

Director Hassan Al Jufairi

Director Sulaiman Khaled Al Sada

Director Najib Khalifa Al Sada

Director Abdullatif Ibrahim Al Muhamali

Managing Director Salem Butti Al Nuaimi

General Manager Mohammed Ali Al Sulaiti

Ownership

Public

56%

Government of Qatar

43%

Qatar Insurance

Company

1%

Key Activities

QNCC, also known as Qatar Cement, was established in 1965 and was the first

cement company in Qatar. The company has a combined production capacity of over

1 million tons of clinker and cement per year. The company is directing resources

towards the production of cement required by the oil and gas industry, namely oil

well cement and slag cement. The company added capacity of around 1.4 million and

a fourth production line with a capacity of around 1.8 million is currently underway.

Exhibit 5.39: QNCC Senior Management


Exhibit 5.40: QNCC Ownership Structure


January, 2008


Oman Cement Company (OCC)

Senior Management

Position Name

Chairman Qathan Yarub Al Busaidi

Vice Chairman Saleh Bin Nasser Bin Juma Al Araimi

Director Jamal Shamis Al Hooti

Director Zahir Bin Mubarak Bin Taiseer Al Noobi

Director Saud Bin Nasser Bin Rashed Al Shakayli

Director Hamdan Mohammed Saleh Al Wahaibi

Director Najeeb Bin Abdullah Bin Mohammed Al Khonji

CEO Jamal Shamis Al Hooti

GM-Resources and Services Najim M Al Timami

Ownership

Public

49%Government

51%

Key Activities

Oman Cement Company was created in 1978. In 1983, a cement plant was set up in

the Rusayl Industrial Estate (North Oman) close to sources of limestone and silica

and had a production capacity of over 600,000 tpy. Due to cyclone Gonu, the

company’s gas supplies were hit and this cost the company large losses. The

company produces 1.65 million tons of cement per year and 1.3 million tons of

clinker. Expansions plans include a cement mill with a capacity of 1.1 million tpy

and a clinker plant with a capacity of 1.46 million tpy.

Exhibit 5.41: OCC Senior Management


Exhibit 5.42: OCC Ownership Structure


January, 2008


Raysut Cement Company (RCC)

Senior Management

Position Name

Chairman Mohammed Bin Alawi Bin Ali Muquaibal

Vice Chairman Mohammed Bin Abdullah Bin Said Al Rawas

Director Saeed Bin Hamad Al Rawas

Director Ahmad Hussein Baqer

Director Zenhom Zahran

Director Saeed Bin Abdulaziz Sabah Al Rawas

Director Mohammed Bin Youssef Bin Alawi Al Ibrahim

Director Mohammed Bin Alawi Bin Abdullah Al Ibrahim

Director Hamed Bin Mohammed Al Sayari

Director Atef Bin Abdulhamid Ahmad Al Kayissi

Director Fahed Bin Abdullah Bin Abdulaziz Al Rajhi

CEO Mohammed Ahmad Al Dheeb

Chief Marketing Officer and Business Support Manager Khaled Saad Abdoon

Finance Manager Aref Javed

Ownership

Public

52%

Islamic Al Inma Bank

12%

Abu Dhabi Fund for

Development

10%

Abdullah Abdulaziz Al

Rajhi

10%

Dolphin International

9%

Sindbad International

Trading

7%

`

Key Activities

The company was established in 1981 and began production in 1984. It is located in

the Raysut area in the south of Oman. Production capacity is 1.9 million tons of

cement per year. Recently the company launched a floating terminal to augment

current cement supplies by around 2000 tons of bagged and bulk cement per day.

Raysut Cement’s capacity will increase to 3 million tpy in 2008 upon the completion

of the commissioning of a fourth production line.

Exhibit 5.43: RCC Senior Management


Exhibit 5.44: RCC Ownership Structure


January, 2008


Kuwait Cement Company (KCC)

Senior Management

Position Name

Chairman Rashed Abdulaziz Al Rashed

Vice Chairman Abdullah Mohammed Al Saad

First Executive Director Abdulmutaileb Ismail Bahbahani

Director Jaber Youssef Al Salman Al Sabah

Director Suleiman Khaled Al Ghunaim

Director Youssef Badr Ahmad Al Kharafi

Director Khaled Abdullah Al Rabeiah

Director Saleh Abdullah Al Kooh

Director Dharar Khaled Fahd Al Rabah

Director Faysal Abdullah Al Khalaf

Director Bassel Saad Abdulaziz Al Rashed

Director Yaaqoub Youssef Al Sakr

Ownership

Public

39%

KIA

29%

NI Group

25%

Al Rashed Industrial Trading

and Contracting Co.

7%

Key Activities

The company, headquartered in the Cement House premises, was established in 1968

to initiate primary production of clinker and cement. Cement production capacity in

1972 was 300,000 tons and as a result of various expansion projects current capacity

stands at 2.07 million tons per year. A factory for the production of white cement

was set up in 1979 and had a production capacity of 75,000 metric tons per year. The

Company’s factories produce ordinary Portland cement, 2 kinds of resisting cement

and masonry cement. Currently, a gray cement mill is being converted into a white

cement mill with a capacity of 115,000 metric tons per annum.

Exhibit 5.45: KCC Senior Management


Exhibit 5.46: KCC Ownership Structure


January, 2008


Chemicals and Plastics

Abu Dhabi Polymers Company (BOROUGE)

Senior Management

Position Name

Chairman HH Youssef Omair Bin Youssef

Director Abdullah Saeed Al Badi

Director Ali Saeed Al Badi

Director Mohammed Al Azdi

Director Henry Sperle

Director Herbert Willerth

Director Espen Ostmoe

Director Harri Bucht

Director Jamal Al Ramahi

Director Paul Baron

Director Adel Khalifa Al Buainain

Ceo Harri Bucht

CFO Ali Al Murar

VP, Operations Paul Baron

Ownership

ADNOC

60%

Borealis

40%

Exhibit 5.47: BOROUGE Senior Management

Exhibit 5.48: BOROUGE Ownership Structure



January, 2008


Key Activities

Borouge is a JV between Abu Dhabi National Oil Company (ADNOC) and Europe-

based plastics producer Borealis. The company currently produces polyethylene and

will produce polypropylene via the new facility Borouge 2. Currently the company

has a 600,000 tonne ethylene cracker unit. In February 2007 the company signed a

contract to build an ethylene cracker with a production capacity of 1.5 million tons

per year bringing total capacity to 2 million tons per year. The additional cracker unit

will enable the production of polypropylene.

January, 2008


Abu Dhabi Oil Refining Company (TAKREER)

Senior Management

Position Name


General Manager Jassem Ali Al Sayegh

Head of Business Development and Studies Fareed Mohammed Al Jaberi

Assistant GM, Operations Ahmad Omar Abdullah

Finance Manager Abdullah Salem Al Zoaby

Ownership

TAKREER is 100% owned by the Government of Abu Dhabi.

Key Activities

Takreer PJSC was established in 1999 by the Abu Dhabi National Oil Company

(ADNOC) to take over the Abu Dhabi and Ruwais refineries. The company’s core

activities include refining crude oil, producing petroleum products and granulated

sulphur. So far, the focus has been on upstream activities, but now the company is

expanding activities into the downstream sector.

The company operates 2 refineries, the Abu Dhabi Refinery and the Ruwais Refinery

and together they produce over 23 million tpy of products such as liquefied

petroleum gas, naptha, unleaded gasoline and liquid and granulated sulphur. Takreer

is currently planning an expansion of the Ruwais refinery.

Exhibit 5.49: Takreer Senior Management


January, 2008


Ruwais Fertilizer Industries (FERTIL)

Senior Management

Position Name


General Manager Mohammed Rashed Al Rashed

Assistant GM and Marketing Manager Ahmad Saeed Ahmad Ghaleb Al Muheiri

Financial Controller Ali Mussalam

Finance and IS Manager Ayoub Mohammed Saleh

HR and Admin. Manager Hassan Al Zaabi

Ownership

Key

Activities

ADNOC

67%

Total (France)

33%

Key Activities

Fertil produces ammonia and urea and is a part of the Abu Dhabi National Oil

Company (ADNOC) group. The company was established in 1980 as a joint venture

between ADNOC and France-based integrated oil and gas company Total. Ammonia

production is 478,150 metric tpy and urea production is 675,250 metric tpy. Of the

output, 10% is sold within the UAE while the rest is exported.

Exhibit 5.50: FERTIL Senior Management

Exhibit 5.51: FERTIL Ownership Structure



January, 2008


Gulf Petrochemical Industries Company (GPIC)

Senior Management

Position Name

Chairman HH Issa Bin Ali Al Khalifa

Vice Chairman Nasser Ahmad Al Sayyari

Managing Director Nasser Ahmad Al Sayyari

General Manager Abdulrahman Abdulhussein Jawahery

Director Dr Mohammed Abdulrahman Al Terkait

Director Anwar Saeed Bin Salma

Director Ahmad Al Sayed

Director Youssef Hamad Al Ateeqi

Director Abdulaziz Mohammed Al Rawaf

Director Ahmad Ali Al Sharyan

Director Mohammed Bin Ali Al Yumni

Ownership

Key Activities

SABIC (KSA)

34%

PIC (Kuwait)

33%

HCOG (Bahrain)

33%

Key Activities

GPIC produces ammonia, methanol and urea in quantities of 400,000 tpy, 600,000

tpy and 400,000 tpy respectively. The company was established in 1979 and uses

Bahrain’s natural gas reserves as a feedstock.

Exhibit 5.53: GPIC Senior Management

Exhibit 5.54: GPIC Ownership Structure



January, 2008


Industries Qatar (IQ)

Senior Management

Position Name

Chairman, Minister of Energy and Industry HE Abdullah Bin Hamad Al Attiyah

Vice Chairman, Minister of Finance Youssef Hussein Kamal

Managing Director HE Abdullah Bin Hamad Al Attiyah

Director Hamad Rashed Al Mohannadi

Director Fahad Hamad Al Mohannadi

Director Abdullah Hussein Salatt

Director Ibrahim Al Ibrahim

Director Faisal Mohammed Al Suwaidi

Ownership

Key Activities

Qatar Petroleum

70%

Public

21%

Private

9%

Exhibit 5.55: Industries Qatar Senior Management

Exhibit 5.56: Industries Qatar Ownership Structure



January, 2008


Key Activities

IQ is a major industrial conglomerate with the following chemicals companies in its

group of companies:

1. Qatar Fertilizer Company (QAFCO)

QAFCO was established in 1969 and set up its first factory in 1973. The company is

majority owned by Industries Qatar. The company uses Qatar’s natural gas reserves

to produce ammonia and urea which are produced via 4 production trains. Ammonia

and urea production stand at 2 million tpy and 3 million tpy respectively. The

company is in the midst of an expansion project, namely, QAFCO V.

2. Qatar Fuel Additives Company Limited (QAFAC)

QAFAC was established in 1991 and produces methanol and methl tertiary butyl

ether (MTBE) for export purposes. The plant is designed to produce 832,000 tpy

menthol and 610,000 tpy MTBE. The company is undergoing the QAFAC-II

expansion project.

3. Qatar Petrochemical Company (QAPCO)

QAPCO was established in 1974 and ethylene and low density polyethylene (LDPE)

are the company’s primary products. The ethylene plant has a designed capacity of

720,000 metric tpy and the two LDPE plants have a designed capacity of 360,000

metric tpy. QAPAC is undertaking various expansion projects such as Qatofin, Ras

Laffan Cracker. The company recently completed the EP2 Cracker Expansion

Project which increased designed ethylene production capacity from 535,000 metric

tpy to 720,000 tpy.

January, 2008


Oman Oil Company (OOC)

Senior Management

Position Name

Chairman, Minister of Commerce and Industry HH Maqbool Bin Ali Sultan

Vice Chairman, Minister of Oil and Gas HH Mohammed Bin Hamed Al Rumhy

Director HH Mohammed Bin Nasser Al Khasibi

Director HH Salem Bin Hassan Macki

Director HH Salem Abdullah Al Rawas

CEO Ahmad Bin Salem Al Wahaibi

CFO Venugopal Venkatesh

Ownership

OOC is 100% owned by the Government of the Sultanate of Oman.

Key Activities

OOC is owned by the government and was established in 1992. One of the projects

of the company is the Oman India Fertilizer Company (OMIFCO). OMIFCO was

established in 2003 and is a joint venture between OOC and 2 fertilizer companies

based in India. The company’s products consist of ammonia and urea via a two-train

manufacturing plant. The production is 1.65 million metric tpy of ammonia and

250,000 metric tpy of ammonia.

OOC is in charge of the Salalah Menthol Company (SMC) project, which is to be

completed in 2010.

Exhibit 5.57: OOC Senior Management


January, 2008


EQUATE Petrochemical Company (EQUATE)

Senior Management

Position Name

Chairperson Maha Abdulrahman Mulla Hussein

President and CEO Hamad Al Terkait

CFO Abdulkarim Mubarak

Ownership

Key Activities

Dow Chemical

Company

42.50%

PIC (Kuwait)

42.50%

BPC

9%

QPIC

6%

Key Activities

EQUATE was formed in 1995 as a joint venture between Petrochemical Industries

Company (PIC), Union Carbide Corporation and Boubyan Petrochemical Company.

The company began production in 1997 and its main products are ethylene glycol,

polyethylene and polypropylene with capacities of 400,000 tpy, 600,000 tpy and

122,000 tpy respectively. Currently, the company is undertaking the Olefins II

project which it will manage, operate and maintain.

Exhibit 5.58: EQUATE Senior Management

Exhibit 5.60: EQUATE Ownership Structure



January, 2008


Petrochemical Industries Company (PIC)

Senior Management

Position Name

Chairman and Managing Director Saad Ali Al Shuwaib

Vice Chairman Maha Abdulrahman Mulla Hussein

Director Satha Nasser Al Sabah

Director Talal Al Adhi Al Sabah

Director Hussein Mohammed Ismail

Director Youssef Abdullah Al Yateem

Director Ibrahim Mohammed Al Ghanim

Ownership

PIC is 100% owned by the Kuwait Petroleum Corporation (KPC) which is owned by

the Government of Kuwait.

Key Activities

PIC is a government owned subsidiary of Kuwait Petroleum Corporation (KPC) and

was established in 1963. PIC has been involved in several joint ventures both

regionally and internationally. The company’s joint ventures in Kuwait are

EQUATE, The Kuwait Aromatics Company (TKAC), The Kuwait Olefin Company

(TKOC), The Kuwait Styrene Company (TKSC). The company will invest in the

EQUATE Olefins II project and is setting up TKAC, TKOC and TKSC to manage

the different production lines of the project. The company is also involved in an

aromatics project.

Exhibit 5.61: PIC Senior Management


January, 2008


Saudi Basic Industries Corporation (SABIC)

Senior Management

Position Name

Chairman HH Prince Saud Bin Abdallah Bin Thanyan Al Saud

Vice Chairman Mohammed Hamad Al Mady

Director Ahmad I Al Hakami

Director Abdullah Mohammed Al Issa

Director Mohammed S Abanumay

Director Abdulmuhsin Bin Abdulaziz Al Faris

Director Saleh E Al Husseini

CEO Mohammed Hamad Al Mady

Ownership

Key Activities

Government of

Saudi Arabia

70%

Public

30%

Key Activities

SABIC, headquartered in Riyadh was established in 1976 by royal decree. It is a

public company of which the government owns 70%. The company produces

chemicals, fertilizers, plastics and metals. Total production in 2006 was 49 million

metric tons. Wholly-owned affiliates of SABIC are Arabian Petrochemical Company

(PETROKEMYA) and Jubail United Petrochemical Company (UNITED).

SABIC currently has 2 projects under construction. These are Yanbu National

Petrochemical Company (YANSAB) and SAUDI KAYAN.

Exhibit 5.62: SABIC Senior Management

Exhibit 5.63: SABIC Ownership Structure



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This research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it

should not be relied on as such.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial

circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. GCG

recommends that investors independently evaluate particular investments and strategies and encourages investors to seek the advice of a

financial adviser. The appropriateness of a particular investment or strategy will depend on investors’ individual circumstances and

objectives.

This report is not an offer to buy or sell any security or to participate in any trading strategy. Investors should seek financial advice

regarding the appropriateness of investing in any securities of investment strategies discussed or recommended in this report and should

understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any,

may fluctuate and that each security’s price or value may rise or fall. Past performance is not necessarily a guide to future performance,

future returns are not guaranteed and a loss of original capital may occur.

Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or opinion or futures contracts.

It is confirmed that GCG or any of its associates:

do not hold shareholding of 1% or more of the total issued share capital in any of the companies covered in the report;

do not act as corporate broker for any of the companies covered in the report;

have not undertaken any corporate finance business over the past 12 months with or for the companies covered in the report ;

are not Market Makers on any of the securities covered in the report.

Further confirmed that, none of the companies covered in the report hold any material shareholding in GCG.

Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in

this report. In addition, investors in securities across different exchanges, whose values are influenced by the currency of the underlying

security, effectively assume currency risk.

Gulf Capital Group (DIFC) Ltd. is a financial services firm regulated by the Dubai Financial Services Authority and located in the Dubai

International Financial Centre. GCG has no link or affiliation with any other financial services firms in the UAE which utilize or go

under the name ‘Gulf Capital’, or any usage similar thereto, and are currently or in the future will be regulated by the UAE Central Bank

or other UAE Federal Regulatory Authorities.

This report or any portion hereof may not be reprinted, sold or redistributed without the prior written consent of GCG.

Gulf Capital Group (DIFC) Limited

Dubai International Financial Center

Registered Office – Offices 5 & 6, Level 4, Precinct Building 3,

P O Box – 214851, Dubai, UAE

Tel: +971 4 363 5730 Telefax: +971 4 363 5739

Website: www.gulfcapitalgroup.com

Email: [email protected]

GCG is regulated by the Dubai Financial Services Authority

GCG Research

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