Emirates Global Aluminium (EGA), the UAE’s largest industrial company outside the oil and gas sector, has signed a preliminary agreement with Japanese conglomerate Itochu to explore the development of joint industrial projects in the Emirates.
The move is in line with UAE efforts to expand the industrial base in the Arab world’s second-largest economy under its Operation 300bn programme, as well as co-operation in Industry 4.0 projects, the company said in a statement on Friday.
Operation 300bn, launched in March 2021, is the UAE's 10-year strategy that seeks to increase the industrial sector's contribution to the country's gross domestic product to Dh300 billion ($81.7 billion) by 2031.
The government also introduced its Industry 4.0 plan in October 2021, which aims to boost productivity and the development of innovative products, increase manufacturing by 30 per cent and add Dh25bn to the nation's economy by 2031.
The UAE this month issued new legislation, the Federal Decree-Law Number 25 of 2022, to support the organisation and development of the national industrial sector by increasing the flexibility to adopt more supportive policies and provide incentives.
"The law aims to be a key enabler for the industrial sector, increase its investment attractiveness, and encourage local and foreign investment in industrial activities, in co-ordination with federal and local authorities," a government statement said.
The new decree-law will become effective in January 2023, applying to all industrial activities in the country, including free, economic and specialised zones.
EGA and Itochu have worked together for decades and the latest partnership is expected to add value to businesses operating in the UAE, Abdulnasser bin Kalban, chief executive of EGA, said in the statement.
"To more than double the size of the UAE’s industrial sector by 2031, our nation needs to develop new industrial capabilities," he said. "Working in partnership with other global companies like Itochu will help EGA accelerate our contribution to Operation 300bn."
Boosting the UAE’s industries and adopting advanced technology is among the central planks of the UAE’s economic diversification strategy — several programmes have been launched in this regard — as it steers away from dependence on oil.
Apart from the Operation 300bn and Industry 4.0 strategies, Abu Dhabi announced in June that it would invest Dh10 billion across six industrial programmes to more than double the size of the emirate’s manufacturing sector to Dh172 billion by 2031.
This will be done by increasing access to financing, further improving the ease of conducting business and attracting foreign direct investment (FDI).
In the same month, the UAE announced the first phase of its NextGenFDI programme, which offers incentives to attract hundreds of digital companies to operate in the country as part of a programme to draw more FDI and position itself as a global technology centre.
As part of the agreement, EGA and Itochu will leverage each other's industrial expertise in opportunities that will complement EGA’s existing operations in the UAE, the statement said.
Potential projects include some that it is hoped will become new industrial activities in the UAE, such as the further processing of EGA’s metal to produce super-high purity aluminium for specialised applications, and the recycling of copper used in EGA’s production process, it said.
"Our aim is to leverage the strengths of each company to progress these projects and create value for us, both as well as for the UAE as a nation," said Kenji Seto, executive officer and president for metals and minerals of Itochu.
EGA, which is jointly owned by Abu Dhabi sovereign wealth fund Mubadala Investment Company and the Investment Corporation of Dubai, operates smelters in Jebel Ali and Al Taweelah, a refinery in Al Taweelah and a bauxite mine and associated export facilities in Guinea.
This week, it signed an agreement to license its technology to Indonesia’s state aluminium company, PT Indonesia Asahan Aluminium, for a smelter expansion project.
The company, which reported record half-yearly earnings as profit surged more than threefold, this week said it hit a production milestone of 40 million tonnes of hot metal made since it was formed in 1979. Last year, it became the first company globally to produce aluminium commercially using solar power.
Tokyo-based Itochu, established in 1858, has operational bases in 62 countries and is engaged in several industries, from textiles and food to energy and technology, as well as business investments in Japan and overseas.