The German company that removed more than 1,000 tonnes of dangerous chemicals from Beirut port said its costs in the operation soared after finding more hazardous material than expected.
The Lebanese government contracted heavy lift transport company Combi Lift to clear the port of hazardous chemicals after thousands of tonnes of unsafely stored ammonium nitrate exploded on August 4, killing more than 200 people and destroying large areas of the capital.
A local investigation, which has been marred by political interference, is ongoing.
Under the contract signed last November, Lebanon would pay $2 million for the disposal of 49 20-foot (six metre) shipping containers. Combi Lift agreed to shoulder the rest of the cost, estimated at the time to amount to $1.6 million.
But there were more hazardous materials at the port than anticipated.
The firm cleared 72 containers of waste in total, including 13 40ft containers. The company also repacked the equivalent of two containers of acid that were scattered in the port.
"All kinds of chemicals were leaking together, it was really uncontrollable," Combi Lift chief executive Heiko Felderhoff told The National. "The threat was enormous."
He said that Combi Lift treated the extra chemicals free of charge, although it cost the company close to $2 million more than initially planned.
Fifty-nine containers of waste left Beirut aboard the ship Amoenitas on Wednesday for a 10-day journey to the German coastal city of Wilhelmshaven.
"It was clear that the company needed to help. It was no doubt the right thing to do"
Combi Lift CEO Heiko Felderhoff
Mr Felderhoff said the chemicals would be incinerated at three disposal facilities in Germany.
Lebanese companies will treat the 13 containers left behind in Beirut.
Although these mostly hold non-hazardous material such as cardboard carton, one container is full of matches, said Mary El Jalkh, Lebanese German Business Council executive director, a private association that facilitated Combi Lift’s work in Lebanon.
"If you have more than 5kg, it's considered dangerous, and we have a container of 40 feet full of matches," Ms El Jalkh told The National.
The 1989 international Basel Convention on hazardous waste stipulates that it must be disposed of in the country of origin when possible.
Combi Lift finished its work by early March, but the departure of the Amoenitas was delayed because of payment issues.
New-York bank JP Morgan refused to issue the letter of credit guaranteeing Lebanon's $2m payment, said two Lebanese sources. JP Morgan declined to comment.
Banks issue letters of credit to serve as guarantee for payments. This is common in cash-strapped Lebanon.
The issue was solved about two weeks ago when US Commerce Bank agreed to sign the letter of credit, the sources said. Commerce Bank did not reply to a request for comment.
“The issue is not whether or not they opened a letter of credit,” one of the sources said.
“The issue is that the courageous government with the president of Lebanon and the prime minister took the decision to hire this company [Combi Lift]. They packed dangerous material that could have caused another accident or explosion."
The Lebanese government is expected to pay $1m after the containers leave Beirut, and $1m once the waste is disposed of in Germany.
Combi Lift plans to continue working in Lebanon. Discussions are ongoing to secure international financing for the removal of chemicals from an oil refinery in Tripoli that was damaged during the country’s 1975-1990 civil war and ceased operation soon after, the company said.
Despite the unexpected increase in the cost of cleaning Beirut’s port, Mr Felderhoff said that “he would do it again”.
“I came one week after the blast. Seeing all the mess, it was clear that the company needed to help. It was no doubt the right thing to do,” he said.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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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