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Sohar: maximising its prime strategic location

Sohar: maximising its prime strategic location



Sohar: a prime industrial hub

Ranked as one of the world’s fastest growing port and free zone developments, Sohar Port and Freezone is currently in a new phase of expansion and growth, aiming to attract $8 billion worth of new investments over the next five years

June 2017

With investments of over $26 billion, over one million tonnes of cargo throughput each week, and over 2,600 ships berthing every year, Sohar now ranks as one of the world’s fastest growing port and free zone developments and is fast becoming one of the Middle East’s prime industrial and logistical hubs.

Add a newly opened cargo airport and a fast expanding network of uncongested highways, with direct connections to Saudi Arabia and the UAE, and the huge and ever increasing regional demand for specialised, heavy construction equipment becomes clear.

 

$8BN WORTH INVESTMENTS

Following a new phase of expansion and growth, Sohar aims to attract $8 billion worth of new investments over the next five years, said a report.

Part of this targeted inflow will be generated by Sohar’s new reclamation project, according to Mark Geilenkirchen, chief executive officer, Sohar Port and Freezone.

Geilenkirchen added that officially to be named ‘Sohar Port South’, the reclaimed land will allow the industrial port to expand its portfolio of companies and add more business to drive growth within the Omani economy.

He added that Sohar will build on the Port of Rotterdam’s extensive experience with similar projects, like the massive Maasvlakte 2 land reclamation in the Netherlands, to achieve the best results during construction.

Maasvlakte 2 is a massive civil engineering project involving the construction of a new port and supporting infrastructure on reclaimed land adjoining Maasvlakte. As an extension of the Port of Rotterdam, the project offers around 2,000 hectares of newly reclaimed land for container terminals and other investments – the difference being that the new ventures are operated on the principles of sustainability.

Moreover, Sohar Port South (known earlier as the Majees Reclamation Project) is a key component of the Sohar 2040 Masterplan, which is currently under finalisation.

Geilenkirchen further noted that on completion it will give a substantial boost to the port’s ability to support Oman’s aim to increase its diversification efforts. Additionally, part of the reclaimed land that will form part of Sohar Port South has already been leased to “significant” new tenants under contracts signed last year, the official stated.

 

$1BN SOHAR POWER PLANT

Alongside, work is progressing fast on the construction of Sohar III, a greenfield, integrated combined-cycle gas turbine power plant located in Sohar Port. The project is valued at over $1 billion and is on track to commence commercial operations by January 2019.

With more than enough capacity to power new developments in the recently announced Sohar Port South and Sohar Freezone Phase II expansions, the new plant will have a power output of over 1,700 megawatts, making it Oman’s second largest power station, said a statement.

Developed by Shinas Generating Company, the project is in partnership with Mitsui, Acwa Power and Dhofar International Development and Investment Holding. The sole off-taker will be Oman Power and Water Procurement Company, who will supply the power produced to Oman’s national grid.

Geilenkirchen, explained the importance of the new plant to Sohar. “We have seen sustained double-digit growth in Sohar for over 12 years now, and we are 100 per cent on track for continued expansion. Our role is to ensure that world-class infrastructure is in place before our incoming tenants require it, so they do not experience delays when commencing production. In times of budgetary constraints right across the GCC, Sohar has once again shown it is possible to develop, finance, build, own and operate a large-scale high performance power plant like this one with a significant share of private investment. Since we started operations here in 2004, public-private partnerships have been at the core of our success story – made in Sohar.”

Sohar Freezone CEO, Jamal T Aziz, added: “The first phase of Sohar Freezone is practically leased out and our technical teams are now busy planning phase-two. The current levels of international interest from investors, especially in the food and logistics sectors is phenomenal and sufficient network power at reasonable rates is a prerequisite to the continued smooth growth of Sohar Freezone.”

 

SELF-SUSTAINING FREEZONE

Additionally, it aims to develop the world’s first self-sustaining freezone cluster – an ambitious facility that will serve as a hub for innovation at the industrial port, said a report.

The proposed Sohar Innovation Zone will create its own energy from renewable resources, recycle its waste, and will serve as an incubator for initiatives designed to bolster the efficiency of the port’s existing tenants, according to the Oman Observer.

Significantly, the Port of Rotterdam, Europe’s largest maritime hub and a 50 per cent partner in the Port of Sohar joint venture, will be playing a major role in the conceptualisation and development of the facility, stated the report, citing a senior official.

Geilenkirchen: new vision for the port

Geilenkirchen: new vision for the port

“We will be looking to create more synergies between our port and freezone and especially developing the freezone as a hub for innovation,” remarked Geilenkirchen.

“This will include a scheme that aims to create better use of resources between the port and freezone’s existing tenants and those looking to set up business. For example, where one company produces steam as a waste product, another may actually need steam for its own industrial processes,” he explained.

According to him, the port and freezone will be operating the Innovation Zone as an ideas factory.

“Working in close co-operation with the Port of Rotterdam, it will try to find innovative ways to solve tomorrow’s logistical problems,” he stated.

He pointed out that sustainability will be a key theme of the futuristic project.

A solar park will cater to the power needs of various commercial, manufacturing and logistics businesses operating at the hub, noted Geilenkirchen.

“From innovative ways to track containers and their loads moving between our port and preezone; through the use of 3D metal printing to create high quality industrial parts onsite; to the world’s first self-sustaining Freezone logistics cluster, at Sohar we firmly believe that everything is possible,” he added.

 

CONTAINER TRAFFIC UP 15PC

Sohar Port and Freezone reported that container traffic at the port was up 15 per cent in 2016 compared to 2015, despite generally lower revenues and a slump in activity in the global maritime industry.

The port’s break bulk was up by 18 per cent and liquid bulk throughput increased 12 per cent year-on-year, the company said.

Sohar, which topped an average of one million tonnes a week for 2016, received over 2,600 vessel calls in 2016, also a significant increase in numbers despite the global trend towards larger ships. 

Revealing the port’s performance figures during its annual business reception at The Chedi in Muscat, Geilenkirchen said the new Food Zone was one of the main highlights of its plans for 2017.

“One of our goals is to maximise our prime strategic location, advanced logistics infrastructure and optimal connectivity to help reduce the 70 per cent gap between food consumption and food production in the GCC; our new Food Zone development will also be seamlessly integrated with the sultanate’s other food security efforts.”

“Sohar Port South is a significant land reclamation area, currently under construction, designed to accommodate new industrial projects that will be announced soon. The project will include new, deep-water berths to the south of the existing port area. It will give a substantial boost to the Sultanate’s diversification efforts, aimed to increase the contribution of non-oil sectors to GDP,” continued the CEO.

Sohar Freezone will also witness a number of new developments in 2017, as plans for the second phase of the Freezone take shape. The first 500-hectares of phase one has almost all been leased out, explained Freezone CEO Jamal T Aziz.

“We are currently improving the business environment based on the output received from the Sultanate’s ‘Tanfeedh’ process. This includes further streamlining the Freezone’s One-Stop-Shop procedures for investors and ensuring that international best practices are applied. A new bonded road corridor, featuring the latest international customs procedures, will further improve connectivity between the Port and adjacent Freezone.”

Probably the most futuristic plans on the table were for an Innovation Zone inside the new Freezone area, to be built in close cooperation with Port of Rotterdam.

“Together with private sector companies, international research institutes and some of the world’s top universities, we are seeking innovative solutions across a broad range of issues that affect our shipping, logistics and industrial sectors,” explained Geilenkirchen. “Ultimately this will all be in the best interests of consumers, both locally and internationally. In Sohar we always say ‘It all starts here’ and that has never been more true than now; 2017 promises to be our most exciting year ever,” he concluded.

 

AGGREGATE BULK TERMINAL

Meanwhile, the Port is planning to start operation of a new bulk terminal aimed at facilitating the export of locally mined construction aggregate (primarily crushed rock, gravel and sand) to other markets in the wider Gulf region, said a report.

Sohar Freezone: finding innovative ways to solve tomorrow’s logistical problems

Sohar Freezone: finding innovative ways to solve tomorrow’s logistical problems

The proposed bulk terminal, which is a part of the deep water bulk jetty currently operated by Brazilian-based mining giant Vale at Sohar, will help local mining and quarrying firms target big-ticket infrastructure projects currently under way in parts of the GCC, Marc Evertse, executive commercial manager, was quoted as saying in a report.

He added that the 270-m-long terminal, which was built in conjunction with the construction of the Vale jetty, is being prepared to handle large volumes of construction material for export.

Evertse pointed out that the demand for primary construction aggregate has soared in countries such as Qatar and Bahrain, where billions of dollars are being invested in major civil infrastructure schemes. 

He also highlighted that the sultanate, given its proximity to these markets and as a source of high-quality materials, is billed as a promising export market.

Evertse further revealed that the terminal is in the process of being prepared for handling large quantities of dry bulk, in particular aggregates. He noted that there is strong pressure from the domestic market to facilitate exports of aggregates.

 

ANTIMONY ROASTER PROJECT

London-based Tri-Star Resources, a major investor in a joint venture antimony roaster project under development at Sohar Port and Freezone, revealed the project is on course for commissioning by the end of 2017, said a report.

The Oman Antimony Roaster is a facility for antimony production with a capacity of 20,000 tonnes of metal per annum, added the report.

Antimony is used in flame retardant compounds and in alloys for batteries, it added.

Tri-Star owns a 40 per cent stake in Strategic & Precious Metals Processing, the company promoting the roaster project.

Tri-Star said SPM has now either committed or incurred over half the capital outlay on the project, with site construction activity having begun and major capital items scheduled to arrive in the first half of 2017.

The company noted that engineering design, procurement of long lead time items and plant layout continues to advance, added the report.

 

TIE-UP WITH SHENZHEN PORT

Sohar Port and Freezone and Shenzhen Port in China have signed an agreement covering the development of mutually beneficial trade and shipping business as part of the Chinese One Belt One Road initiative.

Dong Yanze of the Ports Administration of Shenzhen Municipality and a delegation of other high-ranking Chinese officials attended the ceremony.

Both ports play a critical role in their respective regions and the agreement coincides with China›s construction of twenty-first century maritime silk route networks, providing a timely opportunity for deepening cooperation on both sides.

The agreement will help to increase understanding and relations in areas that include port planning and construction, management and operations, environmental protection, information technology, personnel training and port security.

Geilenkirchen summed up the importance of this agreement from Sohar perspective: “The Middle East plays a critical role in the Chinese One Belt One Road initiatives to develop modern land and maritime silk routes, that will stretch from Shanghai all the way to Hamburg; thanks to the prime location of Sohar outside the Strait of Hormuz, we are ideally placed to act as an important nodal hub on these maritime routes, as from here cargo can be directed though the Suez Canal or around the Cape, depending on vessel size and final destination.

“We are naturally delighted that Shenzen Port has recognised this and we will be working closely with them and the other main ports in China to develop closer ties and more business as we move forward.”

In October, Geilenkirchen was invited as keynote speaker to the China International Logistics Forum in Shenzhen, and spoke to Chinese officials about the development of One Belt One Road and the potential role that Oman could play in its development.

With the support of Sohar container terminal operators Hutchison Ports, part of the Hong Kong based multinational group, both sides have been working to strengthen ties.

The deal signed formalises the establishment of a sister-port relationship, and commits the management of both ports to maintain regular contact and send their staff for exchange visits to discuss details of interest to both sides, including recommending business partners to one other and promoting broader exchanges and cooperation across their respective regions.




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