Saudi Ma’aden acquires SABIC’s 21% shareholding in Bahrain’s Alba

Saudi Ma’aden acquires SABIC’s 21% shareholding in Bahrain’s Alba
Ma’aden is aiming to expand tenfold by 2040. File
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Updated 01 October 2024
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Saudi Ma’aden acquires SABIC’s 21% shareholding in Bahrain’s Alba

Saudi Ma’aden acquires SABIC’s 21% shareholding in Bahrain’s Alba
  • Decision comes a day after Ma’aden signed a non-binding agreement with Alba to potentially create global aluminum produce
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RIYADH: Saudi Arabian Mining Co. has signed an agreement to acquire Saudi Basic Industries Corp.’s 20.62 percent shareholding in Aluminium Bahrain, or Alba, as it continues to pursue regional growth opportunities. 

According to a press statement, the sale proceeds are expected to be within a range of SR3.62 billion ($960 million) and SR3.97 billion. 

The decision to acquire SABIC’s share comes just a day after the mining firm, also known as Ma’aden, signed a non-binding agreement with Alba to potentially create a global aluminum producer.

The deal outlines plans to merge the Saudi firm’s aluminum operations with Alba’s.

 

 

In the statement, Ma’aden added that the transaction is indicative of its ambitions to expand tenfold by 2040, with its aluminum business a core contributing factor to that strategy.

“As we continue in our growth journey, the acquisition of shares in a highly experienced, well-developed regional and global aluminum player firmly supports our ambitions,” said Bob Wilt, CEO of Ma’aden. 

He added: “This week we have announced a number of transactions that align with our strategic intent to strengthen and expand our business both regionally and internationally, further building mining as the third pillar of the Saudi economy.” 

In the statement, SABIC further said that the transaction will enable the company to optimize its portfolio, focus on its core business, and further strengthen its growth in the chemicals industry. 

 

 

“We value our fruitful partnership with Alba over the years, which has contributed significantly to SABIC’s growth,” said Abdulrahman Al-Fageeh, CEO of SABIC. 

He added: “Once this transaction is finalized, we will be better positioned to reinforce our strategy to become the preferred world leader in chemicals and support the successful realization of Saudi Vision 2030.” 

The chemical manufacturing company added that the transaction will also contribute to improved returns and the reallocation of capital to opportunities with higher margins.

SABIC further said that the completion of this transaction is conditional upon obtaining all regulatory approvals from relevant authorities in Saudi Arabia and Bahrain. 


Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption
Updated 11 October 2024
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Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

SINGAPORE: Oil eased on Friday after a rally the previous day, but prices remained set for a second straight weekly gain as investors weighed the impact of hurricane damage on US demand against any broad supply disruption if Israel attacks Iranian oil sites.

Brent crude oil futures fell 29 cents, or 0.4 percent, to $79.11 a barrel by 7:30 a.m. Saudi time. US West Texas Intermediate crude futures dropped 21 cents, or 0.3 percent, to $75.64 per barrel.

For the week, both benchmarks were headed for a 1 percent-2 percent gain.

“Oil prices continue to extend (their) run week-on-week, with geopolitical risks fueling the rebound,” said Yeap Jun Rong, market strategist at IG. But he added that reservations over high crude inventories and a possibly more gradual easing of the US Fed rate have put the recent rally on hold.

In the US, Hurricane Milton plowed into the Atlantic Ocean on Thursday after cutting a destructive path across Florida, killing at least 10 people and leaving millions without power. The destruction could dampen fuel consumption in some areas of the world’s largest oil producer and consumer.

“Investors are evaluating how hurricane damage might impact the US economy and fuel demand,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“Oil prices are likely to hover around the current 200-day average levels, with the primary concern being whether Israel will retaliate against Iranian oil facilities,” he said.

The 200-day average for Brent is at $81.68 a barrel and for WTI it’s at $77.36.

Crude benchmarks spiked this month after Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities. Israel has yet to respond, and crude benchmarks have eased and remained relatively flat through the week.

Israeli Defense Minister Yoav Gallant, however, has said that any strike against Iran would be “lethal, precise and surprising.”

Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

In Lebanon, Israeli strikes on central Beirut on Thursday night killed 22 people and wounded at least 117, Lebanon’s health ministry said. Lebanese security sources said at least one senior Hezbollah figure was also targeted in the attacks.

Gulf states, meanwhile, are lobbying Washington to stop Israel from attacking Iran’s oil sites, out of concern their own oil facilities could come under fire from Tehran’s proxies if the conflict escalates, three Gulf sources told Reuters.

On the supply side, Libya’s National Oil Corporation  said on Thursday it has restored production close to levels before the country’s central bank crisis, reaching 1.22 million barrels per day. 


Saudi Arabia, Oman sign MoU to further strengthen economic ties

Saudi Arabia, Oman sign MoU to further strengthen economic ties
Updated 10 October 2024
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Saudi Arabia, Oman sign MoU to further strengthen economic ties

Saudi Arabia, Oman sign MoU to further strengthen economic ties

JEDDAH: Saudi Arabia and Oman have signed a memorandum of understanding aimed at bolstering economic and planning cooperation based on mutual interests.

The agreement was finalized on Thursday in Riyadh, with Saudi Minister of Economy and Planning Faisal Al-Ibrahim and his Omani counterpart, Said bin Mohammed Al-Saqri, signing a five-year commitment focused on enhancing medium- and long-term economic planning, studies, and modeling, alongside monetary policies and strategies.

The pact highlights a commitment to promoting a green and circular economy, as stated by the Saudi Ministry of Economy and Planning.

Trade between Saudi Arabia and Oman reached SR36.8 billion ($9.81 billion), with Saudi exports accounting for SR22.5 billion, reflecting the growing economic ties between the two nations.

Implementation of the cooperation outlined in the memorandum will involve the exchange of information, experiences, and studies, as well as mutual visits by experts and specialists. The agreement also includes plans for hosting conferences, seminars, and workshops.

The Saudi ministry emphasized that such memorandums would enhance cooperation among Gulf Cooperation Council countries and strengthen bilateral relations between Saudi Arabia and Oman.

On Oct. 9, Saudi Commerce Minister Majid Al-Qasabi welcomed Al-Saqri and his delegation, discussing ways to enhance trade and economic partnerships while addressing various economic topics to boost intra- and external trade among GCC members.

Al-Qasabi underscored that the nation’s economic reforms, guided by Crown Prince Mohammed bin Salman as part of Vision 2030, are designed to implement structural changes that promote sustainable economic growth, leveraging significant developmental opportunities within the Kingdom.

He noted that these reforms have improved the business environment and elevated Saudi Arabia’s global competitiveness, as evidenced by positive international economic indicators.

In April, a MoU was signed between the Kingdom and Oman during a meeting between Sultan bin Salem Al-Habsi, Oman’s minister of finance, and Sultan Abdulrahman Al-Marshad, CEO of the Saudi Fund for Development. Discussions during that meeting focused on cooperation mechanisms between Oman and the fund, as well as updates on collaborative development projects.

The primary objective of these efforts is to enhance the industrial and logistical sectors in Oman, providing essential services to encourage private sector investment in line with the country’s Vision 2040, as reported by the Omani News Agency.

The memorandum is part of broader initiatives aimed at supporting developmental efforts in Oman, including infrastructure, higher education, vocational training, and projects in industry, mining, transportation, communications, and energy sectors.


Closing Bell: Saudi main market closes in green at 11,995.22

Closing Bell: Saudi main market closes in green at 11,995.22
Updated 10 October 2024
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Closing Bell: Saudi main market closes in green at 11,995.22

Closing Bell: Saudi main market closes in green at 11,995.22

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 66.89 points, or 0.56 percent, to close at 11,995.22. 

The total trading turnover of the benchmark index was SR5.85 billion ($1.56 billion) with 185 of the listed stocks advancing and 39 declining. 

The MSCI Tadawul Index also gained 8.14 points to close at 1,504.4.

Similarly, Saudi Arabia’s parallel market gained 69.81 points to close at 24,522.95. 

The primary driver behind the main index’s positive performance was Arab Sea Information System Co., whose share price surged by 9.9 percent to SR7.44. 

On Oct. 9, the company announced the resignation of board member Turki bin Nasser Al-Dahmash, effective immediately. 

Al-Dahmash stepped down for personal reasons after serving on the board for just over a year. 

This comes amid other strategic shifts within the firm, as Arab Sea continues to focus on expanding its technological services, particularly through its newly established cloud computing unit, Era Data, which launched in 2023 with a capital of SR5 million.

Other top performers in the main market include Thob Al Aseel Co. and Al-Baha Investment and Development Co., as their share prices soared by 9.09 percent and 7.69 percent to SR4.80 and SR0.42, respectively. 

Thob Al Aseel Co., a prominent Saudi company specializing in traditional clothing, has been making significant financial strides in 2024. For the first quarter of the year, the firm reported a net profit increase of 44 percent, reaching SR40.1 million. 

This growth was driven by a rise in sales and improvements in profit margins, particularly from high-demand items. Revenue grew by 10.9 percent, and gross income jumped by 21.3 percent, reflecting the company’s strong performance amid increasing market demand.

The worst performer on the benchmark index was Herfy Food Services Co. The firm’s share price dropped by 4.11 percent to SR26.8. 

Recently, Herfy Food Services Co. has been in the spotlight due to internal corporate tensions. The company’s largest shareholder, Savola Group, which holds a 49 percent stake, has requested a shareholder vote to dismiss a board member, Mohammed Abdulaziz Al-Shetwey.

This move is part of an ongoing dispute between Savola and Herfy’s management, raising concerns about governance issues within the company. The shareholder meeting, scheduled for November, will address this matter alongside other significant agenda items.


Middle East conflict poses risk to regional sovereign credit ratings: S&P

Middle East conflict poses risk to regional sovereign credit ratings: S&P
Updated 10 October 2024
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Middle East conflict poses risk to regional sovereign credit ratings: S&P

Middle East conflict poses risk to regional sovereign credit ratings: S&P
  • Increased instability could impact regional governments’ economic outlook and financial stability
  • Although Lebanon remains in default, its economic and recovery prospects have further deteriorated

RIYADH: The ongoing conflict in the Middle East threatens to undermine sovereign credit ratings across the region if it escalates, according to S&P Global. 

The agency warned that increased instability could impact regional governments’ economic outlook and financial stability, with broader implications for creditworthiness depending on the conflict’s trajectory. 

While the immediate effects have been largely contained to specific areas, there are growing concerns that prolonged geopolitical tensions could lead to broader economic disruption across the region, it added. 

“So far, the sovereign credit impact of the conflict has been confined to the two rated sovereigns directly involved in the conflict: Israel and Lebanon. However, we now foresee several potential pathways via which the conflict could have a more material credit impact on the rest of the region,” said S&P Global. 

Its rating on Israel is now two notches lower than on Oct. 7, 2023, reflecting weaker fiscal and growth expectations through 2025, along with significantly heightened security risks. 

The agency also indicated that, although Lebanon remains in default, its economic and recovery prospects have further deteriorated. 

The report said that key areas of vulnerability include energy prices, trade route security, and capital flows, all of which could face heightened pressure if the conflict continues into 2025 as expected. 

The agency also said that the persistent uncertainty is likely to weigh on investor confidence, potentially leading to capital outflows and increased volatility in regional markets. 

While the geopolitical tensions have so far had a limited direct impact on the credit metrics of most Middle Eastern sovereigns, S&P said the potential for wider regional economic stress is growing. 

The conflict could affect key economic indicators such as growth, tourism revenues, remittances, and fiscal balances, depending on how the situation evolves. 

Countries more dependent on stable energy prices or vulnerable to trade disruptions, such as energy importers, could face more pronounced fiscal risks, while oil exporters in the Gulf may benefit from rising oil prices in the short term, it added. 

“Such trade disruptions could be a key challenge for the region, with the potential to increase oil prices and pose fiscal risks to energy importers, although higher oil prices could mitigate the risk for Gulf exporters particularly if the risks of export routes being blocked or oil production facilities being disrupted, remain contained,” added S&P. 

It said sovereign credit ratings in the region are already factoring in elements of geopolitical risk, but the current conflict could amplify these risks and lead to further rating downgrades. 

“Further, we now view the conflict as more complex and unpredictable and consider it more likely to persist well into 2025, with potentially lingering aftereffects,” added S&P. 


Oman’s public revenues see annual rise of 2.3%

Oman’s public revenues see annual rise of 2.3%
Updated 10 October 2024
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Oman’s public revenues see annual rise of 2.3%

Oman’s public revenues see annual rise of 2.3%
  • Net oil revenues reached an estimated 4.65 billion by the end of August
  • Average achieved oil price reached $83 per barrel

RIYADH: An increase in Oman’s net oil revenues drove a 2.3 percent year-on-year rise in public earnings, reaching 8.12 billion Omani rials ($21.07 billion) between January and the end of August, according to new figures. 

The monthly bulletin issued by the Ministry of Finance said that net oil revenues reached an estimated 4.65 billion rials by the end of August, reflecting a 12 percent surge compared to the same period last year.  

The growth in figures suggests vibrant and expanding economic activity, with more funds circulating within the country. 

Oman’s public revenue saw an annual decline of 2 percent year on year in the second quarter, reaching $16.1 billion, the country’s news agency reported in August.  

The sultanate’s economic landscape is heavily influenced by its reliance on oil and gas revenues, making it vulnerable to global price fluctuations.  

The government has been actively working to diversify the economy and reduce dependence on hydrocarbons as part of its Vision 2040 plan. 

The bulletin further showed that the average achieved oil price reached $83 per barrel, while the average oil production amounted to about 1.1 million barrels per day. 

The increase in net oil revenues is attributed to the methodology used by the government-owned firm Energy Development Oman to collect crude earnings and manage cash liquidity.

Net gas revenues reached 1.43 billion rials, reflecting a 15 percent drop by the end of August compared to the corresponding period in 2023. This is due to the change in the methodology for collecting gas revenues.

Current earnings collected until the end of August also decreased by 104 million rials compared to the same period last year to reach about 2.23 billion rials.

The bulletin also revealed that public spending until the end of August amounted to 7.66 billion, an increase of 7 percent compared to actual expenditure during the same period of 2023.

The most prominent expense is the current civil ministry fees, which amounted to 5.43 billion rials, down by 30 million rials compared to the same period in 2023.

Development expenditures of ministries and civil units amounted to 735 million rials by the end of August, with a disbursement rate of 82 percent of the total development liquidity allocated for 2024, which amounted to 900 million rials.

Total contributions and other expenditures amounted to 1.44 billion rials, up by 58 percent year on year. This is primarily owed to the implementation of the social protection system this year.

Support for the social protection system, electricity sector, and petroleum products until the end of August amounted to about 373 million rials, 295 million rials, and 191 million rials, respectively, while the transfer to the debt repayment provision amounted to 266 million rials.

With regard to global and local economic performance, the bulletin explained that the Organization for Economic Co-operation and Development indicated in its interim outlook report issued in September that global growth is expected to stabilize at 3.2 percent in 2024 and 2025, in line with the average increase rate observed during the first half of this year.

The organization also suggested that the delayed impact of tightening monetary policy in the economies of advanced countries has begun to moderate, in addition to easing monetary policies and lower inflation that will support interest rates in 2025. It also disclosed that the inflation rate decline will provide additional support to the growth of real per capita income and private consumption in many economies.

Regarding global oil markets, the bulletin stated that according to the US Energy Information Administration’s Short-Term Energy Outlook report in September, the average price of Brent spot crude is expected to reach about $83 per barrel in 2024, while the average price of Brent spot crude is expected to reach $84 per barrel in 2025.

As for the local economy, S&P raised its credit rating for the Sultanate of Oman to “BBB-” with a stable outlook in its report issued in September, placing it in the first degrees of the investment worthiness index after seven years.

This is due to the continued measures to improve public finances through development initiatives and efforts in the financial and economic sectors and government restructuring. This contributed to restoring the monetary balance between revenues and public spending as intended in the medium-term plan.

This comes in addition to the government’s commitment to reducing the state’s public debt, managing government companies, and decreasing indebtedness.

The agency expected that Oman would achieve moderate financial surpluses of 1.9 percent during the period from 2024 to 2027, growth in real gross domestic product of about 2 percent annually, and record financial surpluses in the current balance of 1.2 percent of GDP.