In the heart of the Middle East, economic powerhouses Saudi Arabia and the United Arab Emirates (UAE) are setting their sights on manufacturing industry development. Recognizing the need for economic diversification and sustainable growth, these nations are leveraging the global advantages of the manufacturing sector, with China, a world manufacturing giant, offering unprecedented opportunities.
This report, part of the Sino-Arab Industry Research Institute’s “Middle East Business Chronicles” series, delves into the 24th installment, providing in-depth insights into industrial policies, legal regulations, industry trends, market demands, competitive landscapes, and potential trade opportunities in the fields of Sino-Arab investments, trade, and engineering construction.
To expedite the transformation and upgrading of their manufacturing industries, Saudi Arabia and the UAE actively seek collaboration with advanced Chinese manufacturing enterprises. Their focus extends beyond metallurgical manufacturing, involving renowned companies such as Baosteel and Sunstone, to embracing leaders in the photovoltaic sector like Xinjiang Goldwind Science & Technology (亿航) and TCL Huizhou Haotong New Energy Co., Ltd. (TCL中环). Additionally, advanced drone technology and traditional industries like valves are also part of this collaborative spectrum.
Through these partnerships, Saudi Arabia and the UAE aim to integrate the essence of Chinese manufacturing, combining it with their own resources and market advantages, to jointly drive the flourishing development of the manufacturing industry in the Middle East. This strategic initiative is poised to not only stimulate economic growth and job creation in Saudi Arabia and the UAE but also deepen economic and trade cooperation between China and the Middle East, injecting new vitality into global manufacturing development.
Looking ahead, there is reason to believe that with the collective efforts of Saudi Arabia, the UAE, and China, the future of Chinese manufacturing in the Middle East will usher in a brighter tomorrow.
1. EHang Establishes the First UAV Manufacturing Facility in the Middle East and North Africa (MENA) in the UAE:
Against the backdrop of the global aviation industry’s pursuit of green and intelligent transformation, Chinese electric vertical takeoff and landing (eVTOL) aircraft manufacturer EHang Intelligent Technology partnered with Monarch Aircraft Manufacturing, a UAE-based aviation company, to announce a significant collaboration in April 2023. The two entities will jointly establish the first electric aircraft manufacturing facility in the MENA region, marking the official entry of electric aviation into the region. According to the agreement, the factory will be located in Abu Dhabi, the capital of the UAE.
This manufacturing base will not only produce and operate electric aircraft and drones to meet the growing demands for passenger and cargo transportation but also establish an advanced command and control center. The center will focus on the development of Urban Air Mobility (UAM) systems and the construction of advanced Advanced Air Mobility (AAM) infrastructure, thereby driving the development of smart cities in Abu Dhabi and the entire MENA region.
Monarch’s Founder and Chairman, Hussain Ali Alomaeirah, expressed confidence in the collaboration, emphasizing that the joint venture would become a crucial pillar for the future of transportation in Abu Dhabi, aligning with the government’s ambitious vision of enhancing smart city infrastructure. Rashed Abdulkarim Al Blooshi, Deputy Minister of the Abu Dhabi Department of Economic Development, highly praised the collaboration, stating that EHang’s partnership with Monarch would further elevate Abu Dhabi’s image as a leading smart city in the MENA region and facilitate economic diversification.
2. Sunstone Invests $270 Million in Establishing a Pre-Baked Anode Production Base in the UAE:
In May 2023, during the “UAE Manufacturing” forum held in Abu Dhabi, the Emirates Global Aluminium company (EGA), the largest industrial giant in the UAE’s petroleum and natural gas industry, signed a preliminary cooperation agreement with Sunstone, a leading Chinese pre-baked anode producer. This historic moment signifies a solid step for the UAE in industrial diversification and international collaboration.
The signing ceremony was attended by Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and Cop28 President. According to EGA’s statement, the collaboration with Sunstone may lead to the establishment of a new pre-baked anode manufacturing plant within the UAE. The enhancement of local production capacity for pre-baked anodes, a critical material in the aluminum smelting process, is essential for securing the stability of the aluminum industry’s supply chain.
EGA, a global leader in the aluminum industry, operates advanced smelting facilities in Jebel Ali and Al Taweelah, Abu Dhabi, along with an alumina refinery in Abu Dhabi, and bauxite mining operations in Guinea. The company, jointly owned by the Abu Dhabi sovereign wealth fund Mubadala Investment Company and Dubai Investments, is the third-largest export commodity in the UAE after oil and natural gas. The aluminum industry holds a 1.4% share in the UAE’s economy, playing a crucial role in the country’s strategy for diversified development.
Currently, EGA’s carbon plants in Jebel Ali and Al Taweelah have an annual production capacity of approximately 1.2 million tons of pre-baked anodes, relying on imports to meet the company’s entire demand. Collaboration with Sunstone aims to provide EGA with a self-sufficient opportunity, where the new factory’s production not only replaces the need for imports but also contributes additional capacity to supply other aluminum smelters in the Middle East, further enhancing the UAE’s position in the global aluminum industry chain.
3. Baosteel Constructs Saudi Arabia’s First Comprehensive Steel Plate Manufacturing Plant:
In May 2023, the global energy and chemical giant Saudi Aramco, leading steel and iron enterprise Baoshan Iron & Steel Co., Ltd. (Baosteel), and the Saudi Public Investment Fund (PIF) signed a joint venture agreement. This historic collaboration aims to establish Saudi Arabia’s first comprehensive steel plate manufacturing plant, signaling a significant stride for the Kingdom in industrialization and economic diversification.
The joint venture is expected to be located in the Ras Al Khair Industrial City, strategically positioned 90 kilometers north of Jubail on the east coast of Saudi Arabia, providing robust infrastructure support for future industrial development. This collaboration brings together Saudi Aramco’s profound strength in energy and industrial services, Baosteel’s advanced technology in the steel plate industry, and PIF’s robust financial and investment capabilities. Not only will this be the first facility of its kind in the Gulf Cooperation Council (GCC) region, but it will also powerfully boost the vibrant development of the regional steel industry ecosystem.
The steel plate manufacturing plant is projected to have an annual production capacity of 1.5 million tons, equipped with advanced direct reduction iron (DRI) and electric arc furnaces. These advanced facilities are expected to reduce carbon dioxide emissions by up to 60% compared to traditional blast furnaces during the steelmaking process.
Importantly, the DRI plant also aims to further reduce carbon emissions through hydrogen compatibility, potentially achieving a remarkable 90% reduction in carbon dioxide emissions without major equipment modifications. Saudi Aramco’s President and CEO Amin H. Nasser stated that this project would significantly enhance Saudi Arabia’s steel industry, strengthen localized supply chains, and inject new impetus into economic growth and diversification. Yazeed A. Al-Humied, PIF’s Deputy Governor and Head of Investments for the Middle East and North Africa, emphasized that the collaboration with Baosteel is a testament to Saudi Arabia’s commitment to sustainable development and environmental protection.
4. Goldwind and ACWA Power Join Forces in Solar Energy Revolution in Saudi Arabia:
As the global focus on renewable energy intensifies, Saudi Arabia, the largest oil-producing country, is embracing a sustainable transformation. In June 2023, Goldwind, a leading global provider of comprehensive wind power solutions, and ACWA Power, a prominent Saudi Arabian developer, investor, and operator of power generation and desalinated water plants, announced a groundbreaking partnership to establish a joint venture for manufacturing and deploying photovoltaic (PV) panels in Saudi Arabia.
The joint venture aims to construct a state-of-the-art manufacturing facility in the King Abdullah City for Renewable Energy (KACARE) Industrial Valley in Riyadh. This facility will specialize in producing high-efficiency solar panels and other PV components, contributing to Saudi Arabia’s goal of achieving 50% renewable energy capacity by 2030. With Goldwind’s advanced technology and ACWA Power’s expertise in project development, financing, and operation, the collaboration is set to become a pivotal force in advancing the Kingdom’s solar energy sector.
The joint venture aligns with Saudi Arabia’s Vision 2030, a comprehensive blueprint for the nation’s economic transformation, which places a strong emphasis on sustainability, renewable energy, and environmental conservation. The project is anticipated to stimulate the growth of the solar energy industry in the region, foster employment opportunities, and position Saudi Arabia as a leading player in the global renewable energy market.
5. TCL Huizhou Haotong New Energy Co., Ltd. Pioneers Lithium Battery Manufacturing in Saudi Arabia:
In a strategic move to address the increasing global demand for electric vehicles (EVs) and energy storage systems, TCL Huizhou Haotong New Energy Co., Ltd., a subsidiary of TCL Corporation, one of China’s largest consumer electronics enterprises, entered into a landmark agreement with the Saudi Basic Industries Corporation (SABIC) in August 2023. This agreement outlines the establishment of a lithium battery manufacturing plant in Saudi Arabia, positioning the Kingdom as a key player in the burgeoning electric mobility and clean energy sectors.
The collaboration leverages TCL Huizhou Haotong’s expertise in lithium battery technology and SABIC’s robust presence in the global petrochemical industry. The manufacturing plant is planned to be located in the King Salman Energy Park (SPARK), a mega-industrial complex aimed at fostering innovation and sustainable development in the energy sector. The facility will focus on producing high-performance lithium-ion batteries for electric vehicles, providing a critical component for the burgeoning EV market.
Saudi Arabia, endowed with abundant reserves of natural resources, particularly in the petrochemical sector, views this collaboration as a strategic move towards diversifying its economy and participating actively in the global transition to clean energy. By establishing a domestic lithium battery manufacturing capability, the Kingdom aims to support the growth of its electric vehicle market, reduce dependence on fossil fuels, and contribute to global efforts to mitigate climate change.
6. Dongfang Valve Co., Ltd. Secures Key Contracts in UAE’s Oil and Gas Sector:
Chinese industrial valve manufacturer Dongfang Valve Co., Ltd., in collaboration with the Abu Dhabi National Oil Company (ADNOC), secured multiple key contracts for the supply of industrial valves in the UAE’s oil and gas sector. The agreements, signed in September 2023, mark a strategic partnership aimed at enhancing the efficiency and reliability of the UAE’s oil and gas infrastructure.
Under these contracts, Dongfang Valve Co., Ltd. will supply a comprehensive range of industrial valves, including ball valves, gate valves, and control valves, to various ADNOC projects. The partnership underscores the commitment of both parties to elevate the standards of safety, environmental sustainability, and operational excellence in the oil and gas industry.
ADNOC, one of the world’s leading energy companies, plays a pivotal role in driving the UAE’s economic growth. The collaboration with Dongfang Valve Co., Ltd. aligns with ADNOC’s vision of leveraging advanced technologies and best practices to enhance the efficiency and competitiveness of its operations. Dongfang Valve Co., Ltd., with its cutting-edge valve technology and extensive industry experience, is well-positioned to contribute to the success of ADNOC’s projects, further solidifying the partnership between China and the UAE in the oil and gas sector.
Conclusion
The establishment of these six Chinese manufacturing facilities in Saudi Arabia and the UAE represents a significant milestone in the economic cooperation between China and the Middle East. As the region seeks to diversify its economies and embrace sustainable development, these collaborations contribute to the transfer of advanced technologies, the creation of job opportunities, and the enhancement of industrial capabilities. The partnerships span diverse sectors, including aviation, aluminum, steel, renewable energy, electric vehicles, and oil and gas, showcasing the breadth and depth of the collaboration between Chinese enterprises and Middle Eastern nations.
China’s expertise in manufacturing, coupled with the Middle East’s strategic location and commitment to economic transformation, positions these collaborations as catalysts for regional and global economic development. The joint ventures not only boost the manufacturing capabilities of Saudi Arabia and the UAE but also pave the way for increased trade, innovation, and shared prosperity between China and the Middle East. As these manufacturing facilities begin operations, they are expected to contribute to the sustainable growth of the Middle East’s industrial landscape, setting the stage for continued collaboration and mutual benefit in the years to come.