UAE/TURKISH BUSINESS RELATIONS

UAE/TURKISH BUSINESS RELATIONS

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  • Dr. Nilgün Birgören
    Dr. Nilgün Birgören    Premium Member   Group moderator
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    Ras al-Khaimah mines a variety of seams
    Ras al-Khaimah, the mountainous northern outpost of the United Arab Emirates, never had much oil, rather like Dubai, its more famous neighbour. But rather than basing its economy on trade, it chose to look underground for mineral wealth and to adopt an industrial strategy.

    That has led to a large ceramics factory – RAK Ceramics – cement factories and quarrying in the Hajar mountains becoming the chosen vehicles for developing the emirate.

    The company has invested in clay mines in Thailand and Indonesia, an important raw material for RAK Ceramics, while also mining for copper in Congo and Armenia.

    Madhu Koneru, managing director of RMMI, says the investment will mean price stability in the future, allowing the emirate to plan with more confidence.

    “The ruler could see the need for constant prices,” says Mr Koneru, whose family business has built up a trade partnership with the government since the 1970s. “Why not invest in the resources needed for infrastructure?”

    The latest venture, investing in a coal mine in the Indonesian region of East Kalimantan and building a related railway and port to transport the coal to the sea, follows that logic. But this time the rationale can be found in the emirate’s thorniest problem over the past year: power, or more accurately, the lack of it.

    An over-reliance on the UAE federal power authority has left Ras al-Khaimah starved of enough electricity to power a series of real estate developments. Sheikh Saud bin Qasr Al Qasimi, the emirate’s crown prince, launched the developments during the years of the petrodollar boom, with the vision of turning Ras al-Khaimah into a mini-Dubai.

    Long before the credit crunch tightened the noose on the property market, the emirate had decided that it needed to seize the initiative in terms of utilities.

    Coal is an interesting, if controversial, alternative to the gas-fuelled power that is becoming the norm in the Gulf, which contains some of the world’s largest natural gas resources. Ajman, another UAE emirate with buildings standing empty for lack of electricity, also has plans for a coal-fired station.

    Mr Koneru says Ras al-Khaimah’s coal-fired plant, which will be launched in 2011, will develop to a maximum capacity of 1,000MW and need more than 7m tons of coal a year. About 35 to 50 per cent of of the coal from the Indonesian venture will go to Ras al-Khaimah, with the remainder exported to other Asian markets such as Japan and India.

    The regional government is a 7.5 per cent equity partner in the project, which will see the joint venture build a 120km railway on the eastern side of Borneo, which will cost about $1bn over five years, but halve road transportation costs. The project should pay back its costs in about five to 10 years, Mr Koneru says.

    Using coal will cut the emirate’s costs up to 30 to 40 per cent compared to gas-fired power, but it throws up environmental concerns, which are noted by UAE residents who see the pollution surrounding the emirate’s existing cement factories. The global trend is against burning fossil fuels such as coal.

    But Mr Koneru plays down such worries, saying the coal has a particularly low sulphur content, allowing for cleaner burning. The location of the power plant, wedged between a port and a cement works, will also integrate their systems, allowing ash from the burned coal to be used in the cement plant.
    • 14 Apr 2009, 10:49 pm