Major industrial initiatives launched by the Omani Government are helping it achieve its goals of a vibrant non-hydrocarbons sector and greater opportunities for citizens in the workforce.

The Sohar Industrial Port, one of the latest major industry-boosting developments, has been a game changer, making the sultanate a producer of high-value industrial goods and positioning the non-oil and gas sector as more than a marginal force in the economy.

The UN Economic and Social Commission for Western Asia (Escwa) has projected a 4 per cent growth for the sultanate in 2012 and indicated in a report that Oman and other GCC states though mainly driven by the oil sector had the non-hydrocarbon sector increasingly contributing to growth.

A recent Kuwait Finance House-Research report was more optimistic, expecting real GDP growth in Oman to be as high as 6 per cent this year as a result of several infrastructure and industrial projects and the impact of the GCC aid package. The report notes that around 70 per cent of the proposed growth this year will come from the non-hydrocarbon sector. Contributing to the GDP growth will be an increase of RO800 million ($2.08 billion) in government spending in 2012.

Confidence is growing that the non-hydrocarbon sector will be a bulwark against the vagaries of oil prices and this is demonstrated by the strong progress made by high-investment industries such as metals and petrochemicals and their vision to expand their role.

Sohar Aluminium is awaiting a definitive word from the government about gas availability for a major expansion. It says it plans to invest $4 billion to raise primary aluminium capacity to 1 million tonnes per year from its current capacity of 370,000 tonnes. Earlier it had planned to expand to 800,000 tonnes annually and invest $3 billion to reach that capability. Its CEO Henk Pau asserted the company made a thorough study of the future benefits of having a larger plant and believes that although the metal’s prices have dropped global demand is still huge and growing.

The Vale pelletising plant in Sohar

VALE ON THE MARCH

Earlier this year Vale reached full production capacity of 9 million tonnes per year at its new iron-ore pellet plant in Sohar Industrial Port and plans to double that capacity in its endeavour to meet rising demand from steel plants in the Middle East and East Asia. Vale has dug in deeply in Oman, building also a deepwater terminal and a distribution facility and making the country a hub for iron ore pellets.

In petrochemicals, Orpic announced it achieved a new milestone with the production of a million tonnes of world-class polypropylene at its Sohar plant since first going into production in late 2006.

The only polypropylene manufacturing facility in the country, it reflects a national vision to develop downstream petrochemical products. The company gets its feedstock from an adjacent refinery which also operates under the Orpic name.

Orpic registered a 41 per cent improvement at the polypropylene plant over the past year, which helped it realise quicker the one-million-tonne mark.

Another significant feature for Orpic in the middle of this year was the passing of a full year with zero fuel imports, a development it reached by successful utilisation of its refineries in Sohar and Mina Al Fahal, Muscat. It prompted Minister of Oil and Gas and chairman of Orpic Dr Mohamed bin Hamed Al Rumhy to say: “As a major oil producer, Oman should be able to meet its own growing fuel needs. Thanks to the efforts of our team at Orpic, we can now do that.” Gaining self-sufficiency in fuel is key to the growth of Oman’s petrochemicals and other sectors.

The Salalah Methanol plant

AN INDUSTRIAL ENVIRONMENT

Signs that the industrialisation drive is picking up steam can be seen from small and big ventures reporting fresh successes and from enterprises in the process of being set up.

For example, US-based LPP Combustion and Sun Metals signed an agreement to introduce new technology to convert conventional liquid fuels into synthetic natural gas for the first time in the Middle East region. The two firms will set up a lean, pre-mixed, pre-vapourised (LPP) skid to supply Sun Metals’ integrated steel plant at Sur Industrial Estate with LPP gas made from gasoline. In the first phase, it is envisaged that the steel mill will have capacity to produce 600,000 tonnes per annum of billets and blooms. Capacity will be doubled in the next phase.

A joint venture company, Dhofar Steel, has been formed to build a steel plant in the southern Oman city of Salalah. The investors are Oman’s Salalah Development Company, the Al Suwaidi Group of the UAE and Saudi Arabia’s Al Tuwairqi Group. The plan is to produce 1 million tonnes of steel annually. It will employ 1,000 Omanis.

As many as 1,000 Omanis would get employment there, but the company made no mention of when construction would take place. The Al Tuwairqi Group operates steel products plants in Saudi Arabia.

Salalah, home to the proposed mill, is also home to an ambitious free zone whose stated goal is to attract $15 billion of investment and create creating 50,000 jobs (direct and indirect). Already foreign direct investment of $3.5 billion has been secured to date and approximately 1,222 jobs created for the local population. Seven tenants are fully operational within the Salalah Free Zone, with a further eleven confirmed.

One of those tenants is Octal which has just expanded its annual production capacity to a million tonnes of PET bottle-grade resin. Octal is the largest single-site PET producer in the world.

Chairman Sheikh Saad Suhail Bahwan commented: “This milestone is nothing short of incredible. What we have previously been able to produce in three years can now be achieved in only one, giving us a stronger competitive advantage to serve the growing demand for high quality.”

As Salalah Free Zone gains tenants and investments, focus is also growing on the up and coming Freezone Sohar near Sohar Industrial Port where more than 100 hectares have been leased out to a client base which is investing more than $325 million, according to Neelima Vyas, COO of the enclave.

Tenants enlisted so far are investing in the manufacturing of steel and downstream-steel related products, logistics and the marble industry. Clients include Metkore, Indsil, Dunes, Sun Petrochem, Container Solutions, S&T Marble and METS. None of the tenant’s facilities are operational. “A majority of our tenants are foreign investors and that is expected to continue, since our incentives are geared towards FDI,” says Vyas. “Priority sectors Freezone Sohar targets are steel, agriculture and general logistics. We also foresee opportunities in the automotive sector,” she added.

 Work is also underway on a new economic hub to be developed in the central region by the Special Economic Zone Authority of Duqm (Sezad) as part of a new city.