As the rest of the emirates look to deepen economic ties with the world's established financial centres, the Ras al Khaimah Government has quietly been directing billions of dirhams of investment into a few of the world's less developed corners. On Tuesday, Sheikh Saud bin Saqr, the Crown Prince and Deputy Ruler of Ras al Khaimah, met with the industry minister of the Democratic Republic of Congo (DRC) to discuss an expansion of economic ties between the countries. The northern emirate has already invested in a property development, an airline and mining assets in the desperately poor, war-torn African country.
"Congo has vast potential and we would like to participate in the country's development, which will enable it to attain its full growth potential," Sheikh Saud said. "We are looking for a strong partnership that would enable RAK-based entities to use their expertise and investments in forging mutually beneficial ties." Ras al Khaimah has adopted a similarly unified investment strategy in Indonesia, where it has developed clay mines to source raw material for RAK Ceramics, and is planning a port, railway and industrial city for a large-scale coal mining operation for RAK Minerals and Metals Investments (RMMI). Earlier this year, RMMI bought a mining firm in Armenia, and Sheikh Saud has met with the Armenian president to discuss expanded ties.
The emirate has also targeted Georgia, now the scene of a tense military conflict between Russian and Georgian troops, where it owns a port, property developments and the country's largest egg farm. The Government-led approach pushed by Sheikh Saud has earned Ras al Khaimah companies a measure of security and stability in some difficult business environments, said Madhu Koneru, the managing director of RMMI. "It's His Highness's business plan," Mr Koneru said. "The integrated model has to work."
In terms of hostile business climates, the DRC is renowned. The country ranked last in the World Bank's 2008 Ease of Doing Business survey and continues to struggle with an unstable political environment years after the conclusion of a bloody civil war. The risks facing Ras al Khaimah's strategy were on display last week in Georgia, where Rakeen Development and the Ras al Khaimah Investment Authority (Rakia) have invested hundreds of millions of dollars in property development and Poti Port. During Russian military strikes, three workers were killed, the company reported, while electrical facilities and a container handling terminal were also damaged.
But Mr Koneru noted that in the DRC, the emirate's big investments have earned needed help and attention from the government. Rakeen Development is building a hotel, convention centre and tower in the capital, Kinshasa, for a total of Dh1.8 billion (US$500 million). Last month, Rakia bought a 60 per cent stake in a defunct Congolese airline, which does not have its own fleet but possesses existing air rights to several destinations in central Africa. RAK Airways said it would invest Dh588m in the carrier, to be called Air Congo, and obtain nine aircraft.
In March, RMMI acquired stakes in two local mining companies, including a small copper smelter, and it is now searching for copper in the south of the country. Mr Koneru said the company had allocated $250m for investment in the country. Although copper prices have held at close to record levels, Mr Koneru said his company's investments in Congo were designed for the long term, and he did not believe political turbulence would be a major impediment. "I think you've got to have a very long-term perspective in the mining business," he said. "Even at $5,000 [per tonne] we'll continue investing."
On the village level, Mr Koneru said the company had worked to earn the friendship of locals. He said the company had become popular in Indonesia and parts of Congo by handing out food and clothing, teaching English and providing jobs. At the company's limestone operation in Congo, he noted, currently only one worker is an expatriate. The biggest challenge in the DRC was a lack of infrastructure, he added, which had pushed up the potential cost of copper mining. It is "a serious problem, and a great concern to us", he said. "We have seen great development on the infrastructure side."
But Mr Koneru said he was confident the DRC government was committed to building the necessary infrastructure, especially after China announced earlier this year that it would commit $9bn to acquiring and developing copper assets in the country. RMMI has kept a tight focus on three commodities: copper, coal and clay for ceramics. Mr Koneru said the company was not yet done for the year, and expected to make another major announcement in about a month's time. He indicated that the next investment would take place in either South America or Australia "to spread the risk".
In the long term, the company wants to invest in coal-to-liquids technology and build the world's biggest copper smelter, Mr Koneru said. @Email:cstanton@thenational.ae
