Within the next two or three years, the industrial landscape of Saudi Arabia will undergo considerable change with the implementation of a number multibillion riyal projects by the National Industrialization Company in partnership with local and international companies. The company is No. 17 on this year’s Top 100 list, up from 30 last year. It has already embarked on an ambitious plan to execute these industrial and petrochemical projects, including a state-of-the-art ethylene and polyethylene complex. Its wholly-owned National Petrochemical Industrialization Company (or Tasnee Petrochemicals) is responsible for its petrochemical developments.
Through its joint venture Tasnee & Sahara Olefins Company, Tasnee Petrochemicals has signed “a prestigious joint venture deal with Basell Polyolefins to launch the SR10-billion company,” says Dr. Moayyed ibn Issa Al-Qurtas, Tasnee’s chief executive. He adds that the project is the first of its kind launched by Tasnee Petrochemicals in collaboration with local and foreign partners to produce bulk quantity of ethylene and polyethylene. It will provide job opportunities for over 600 Saudi nationals.
He explains that Tasnee & Sahara Olefins Company (a joint stock company co-owned by Sahara Petrochemicals Company and Tasnee Petrochemicals) and Basell Polyolefins have jointly established the Saudi Ethylene and Polyethylene Company (SEPC). The consortium of Linde/Samsung is the contractor for the ethylene plant, while Technimont is the contractor for the polyethylene unit. According to Al-Qurtas the project, which is located in Jubail, will produce some one million tons of ethylene, 285,000 tons of propylene, 400,000 tons of high-density polyethylene and 400,000 tons of low density Polyethylene together with a number of derivatives.
SEPC is 75 percent owned by Tasnee & Sahara Olefins Company with the remaining equity held by foreign partner Basell Polyolefins. The Jubail plant will be operational in the second half of 2008.
About 30 percent of the total project cost of SR10 billion will come proportionately from the partners. The Saudi Industrial Development Fund (SIDF) has approved an SR1.2-billion loan while the remaining investment will be raised from the Public Investment Fund and Saudi and foreign commercial banks. Al-Qurtas explains that the SEPC products will be marketed internationally by Basell Polyolefins, while Tasnee will market the products in the Kingdom, regionally and in certain other countries.
Tasnee sees a considerable advantage in its tie-up with Basell, a major player in the production of polypropylene and polyethylene. Basell Polyolefins is owned by Access Industries of the US and has production facilities in 26 countries and a business presence in 120 countries worldwide.
Looking to other projects promoted by Tasnee, Al-Qurtas says plans are under way to boost the manufacturing capacity of Tasnee affiliates such as the National Batteries Company (NBC). After expansion, NBC will be able to manufacture more than two million batteries per year.
“Tasnee’s National Lead Smelting Company (Rasass) has already doubled its lead production capacity,” adds Al-Qurtas, explaining that Rasass’ current record high performance has been driven by increased sales and the improvement of production efficiency. Rasass is also an important environmental project because it recycles discarded car batteries to produce lead ingots and other materials. Another Tasnee affiliate, Rowad National Plastic Company, has also emerged as a market leader in the production of multipurpose plastic sheets.
Al-Qurtas points out that Tasnee has always been a key player in the industrialization process. It was the first Saudi joint stock company wholly-owned by the private sector and was launched with a paid-up capital of SR300 million. “The company was set up with a strong belief that industrial growth is the right choice for diversification of our economic base and for pushing forward the development of the Kingdom,” he says.
Today, Tasnee holds significant equity, often of more than 50 percent, in many projects. It is the full owner of Al-Rowad National Plastic Company, has 80 percent in the National Batteries Company, 71 percent in the National Lead Smelting Company (Rasass), 66 percent in the National Titanium Dioxide Company, 61.6 percent in National Operation and Industrial Services Company and 57.9 percent in the National Inspection and Technical Testing Company.
Tasnee also holds 57.9 percent of the equity in RWTUV-Middle East, 55 percent in the Arabian Axles, Foundries & Spare Parts Company and due to the recent merger, now has full ownership of the National Petrochemical Industrialization Company. There are several other investments currently being considered by Tasnee and its partners. Comments Al-Qurtas: “This is in line with the principal activities and the objectives of the company and its subsidiaries, which are also working hard to ensure the transfer of technical know-how to the Middle East in general and the Kingdom in particular”.
Al-Qurtas states that Tasnee has played a key role in more than 35 industrial projects. In doing so the company has also emerged as a profitable venture recording consistent growth, particularly in the last three years.
The production capacity of the National Company for Titanium Dioxide (Cristal) was recently increased from 70,000 tons to 100,000 tons a year. The company is now working to raise production capacity still further. Other Tasnee affiliates that have witnessed major expansion include the National Operation and Industrialization Services Company (Khadamat), the National Metal Manufacturing and Casting Company (Maadaniah), the Arabian Axles, Foundries & Spare Parts Company and Rowad National Plastic Company.
In response to the demand of the national and regional markets, more expansion projects among Tasnee affiliates are likely to take off within the next two years. Meanwhile, Tasnee has made disposals in what it considers to be noncore fields. It sold its share in Advanced Electronics Company, Alsalam Aircraft Company and remaining portion of its equity in the National Glass Manufacturing Company (Zoujaj). It has also reduced its share in the National Metal Manufacturing and Casting Company (Maadaniah).
Since its launch in 1985, Tasnee has played a significant role in the Kingdom’s industrial growth, participating in a range of national and joint-venture projects across the country. It continues to seek lucrative returns for its shareholders’ investments through the establishment of industrial projects that will also help the growth of the national economy, its diversification and the transfer of technology.
Much remains to be done. The company continues to work on plans that will both boost Tasnee’s bottom-line figures and give further impetus to the industrialization of Saudi Arabia.
