Abu Dhabi’s Ta’ziz has awarded a contract worth $1.7 billion to Samsung E&A for the construction of one of the world’s largest methanol plants in Al Ruwais Industrial City in Al Dhafra region.
The 1.8 million tonnes per annum (mtpa) plant will be the first methanol production facility in the UAE and will advance the Emirates' economic diversification by unlocking new domestic chemical value chains, Ta’ziz said in a statement on Monday.
The new plant, upon completion in 2028, will be powered by clean energy from the grid, making it one of the world’s most energy-efficient methanol plants.
Methanol is among the most promising transition fuels, offering a cleaner alternative to conventional fuels used in power generation, such as coal and diesel. Methanol also serves as an alternative to high-sulphur fuels used in marine transport. Primarily used to produce chemicals such as acetic acid and formaldehyde, methanol is also a clean-burning fuel that produces fewer smog-causing emissions.
The new contract award "is a significant step in realising Ta'ziz’s vision to drive the UAE’s industrial growth by creating a world-scale integrated chemicals ecosystem in Al Dhafra region”, Mashal Al Kindi, chief executive of Ta'ziz, said.
“The plant will enhance the UAE’s position as a leader in sustainable chemicals production and strengthen Ta'ziz’s role in enabling Adnoc’s global ambition to lead the chemicals sector.”
Founded in 2020 as a joint venture between Adnoc and Abu Dhabi's investment and holding company ADQ, Ta'ziz, is a manufacturing, industrial services, logistics and utilities ecosystem that supports the production of chemicals and transition fuels.
In its initial phase, Ta’ziz will produce 4.7 mtpa of chemicals by 2028. That includes methanol, low-carbon ammonia, polyvinyl chloride, ethylene dichloride, vinyl chloride monomer and caustic soda.
Ta'ziz has signed several new deals in the past few years to support industries. These include 31 land reservation agreements with companies for its light industrial area, as well as a deal to develop a low-carbon ammonia plant in Ruwais with the capacity of about one million tonnes a year.
In 2022, the company teamed up with India's largest private petrochemicals company, Reliance Industries, on their joint venture to develop a major chemicals project at the Ta’ziz industrial chemicals zone in Ruwais, worth $2 billion.
In 2023, Ta'ziz was designated as an investment zone to strengthen the business environment in Abu Dhabi's industrial sector.
Methanol production has nearly doubled in the past decade, with about 98 million tonnes produced a year, the International Renewable Energy Agency (Irena) said in a 2021 report. Under current trends, production could rise to 500 million tonnes a year by 2050, it said.
The methanol market is projected to grow at a compound annual rate of more than 4.87 per cent between 2022 and 2027, according to Mordor Intelligence. Over the short term, one of the major factors driving the market is the increasing demand for methanol-based fuel, it said.
"We plan to actively leverage local resources and our network of partners based on our extensive regional experience in the Ruwais industrial complex," Hong Namkoong, president and chief executive of Samsung E&A, said in a separate statement.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Your rights as an employee
The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.
The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.
If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.
Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.
The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.
