Sadara Chemical Company and Saudi National Automobiles Manufacturing Company (SNAM) have signed a cooperation agreement for the supply of specialty chemicals and plastics for SNAM’s planned automobile manufacturing cluster in Jubail, Saudi Arabia.

Under the agreement, Sadara will work with SNAM’s Auto Cluster `tenants’ who will include automobile parts manufacturing companies – primarily Original Equipment Manufacturers (OEMs) and automotive Tier-1 and Tier-2 manufacturers.

The chemicals company will identify potential third-party investors who are able to utilise Sadara’s slate of specialist chemicals and plastics products to manufacture automotive parts locally.

Sadara officials at the signing ceremony

Spread over an area of 1 million sq m, the auto cluster is expected to be the largest manufacturing cluster to be located in PlasChem Park, an industrial zone located adjacent to the Sadara site in Jubail Industrial City II. 

The Park is being developed in collaboration with the Royal Commission for Jubail and Yanbu and will consist of downstream chemical and conversion industries supplied with products from Sadara and others in Jubail.

“This is an exciting partnership for us as it will help drive development of an emerging sector within Saudi Arabia’s downstream manufacturing industry. Our specialty chemical products can be utilised by third-party investors to make components used in automobile manufacturing. With SNAM on board, we have a catalyst for manufacturers to come in and quickly begin to realise value on their investments,” said Ziad Al Labban, CEO of Sadara.

The project will include basic facilities such as a press shop, welding (body) shop, paint shop, and general assembly shop, in addition to support facilities such as a logistics warehouse, test track, and admin building. Furthermore, another one million sq m next to SNAM’s factory has been allocated for automotive Tier1 suppliers.

“In order to create a sustainable automotive industry ecosystem, SNAM researched local companies with operations related to automotive industry in order to activate Tier2 and Tier3 suppliers who can do business with international Tier1 suppliers. Another important aspect of SNAM’s plan is to utilise the local resources in manufacturing the automotive parts as much as possible,” said D Fahd S Al Dohish, president and CEO of SNAM.