- Urban
development fuels the need for construction materials, coatings, and chemicals
related to infrastructure
- Technological
advancements propel the demand for specialty chemicals used in electronics,
materials science, and high-tech applications
- Stringent
regulations drive the development and adoption of eco-friendly chemicals,
fostering demand for sustainable solutions
- Evolving
consumer preferences for products like cosmetics, personal care items, and
specialty chemicals influence industry demand
- Increased
healthcare awareness and aging populations contribute to the demand for
pharmaceuticals and medical chemicals
- Growth
in the automotive sector stimulates demand for chemicals used in manufacturing,
coatings, and vehicle materials
GCC
chemical industry investments
In
2021, capital investments in the GCC chemical industry saw a drastic reduction
by over half, totaling US$ 4B. Companies, post-pandemic, are strategically
rationalizing investments, putting many projects on hold, and prioritizing
recovery efforts, while others approach completion. Despite a substantial
global decline in investments, the Arabian Gulf region anticipates
approximately US$ 61B in planned and committed investments spanning from 2021
to 2025. Notably, GCC chemical producers persisted in allocating funds to
environmentally responsible projects aligned with their Environmental, Social,
and Governance (ESG) agendas, with a primary focus on energy efficiency and
addressing air pollution throughout 2021.
Global
metal market and growth drivers
The
global metal industry encompasses the production of forged metal components and
structural steel fabrication. Projections indicate that the major metals market
worldwide is poised to expand from approximately US$ 1.4T in 2022 to around US$
1.7T by 2028.
Several
factors contribute to the growth of the global metal industry, including
heightened construction and infrastructure activities, increasing population
levels, rising disposable income, and the pivotal role of automation as a key
driver for growth and efficiency within the metals sector.
GCC
major metals production sale
In
2022, the Gulf Cooperation Council (GCC) recorded a steel production volume of
approximately 15.2M tons, reflecting a decrease of 1.2M tons from the previous
year. Saudi Arabia emerged as the leading steel manufacturer within the GCC,
contributing significantly with a production value of around US$ 1.4B.
In
2022, the Gulf Cooperation Council (GCC) achieved an aluminum production volume
of approximately 6.2M tons, marking a notable increase of 0.7M tons compared to
the previous year. The United Arab Emirates (UAE) emerged as the leading
aluminum producer in the GCC, boasting a production capacity of around 1.6M
tons. Following closely, Bahrain and Saudi Arabia contributed significantly
with production capacities of approximately ~1.6M tons and ~1M ton,
respectively. This underscores the region's prominence in the global aluminum
production landscape.
Global
and GCC construction material market
The
construction materials market encompasses a diverse array of products essential
for various building and infrastructure projects. This includes wood products,
plywood, laminates, cement, glass, flooring, ceiling materials, pipes, plumbing
fittings, paints, coatings, sanitary ware, faucet ware, hardware fittings,
electrical appliances, and items related to interior and beautification. These
components collectively contribute to the construction and finishing of
residential, commercial, and industrial structures.
GCC
decarbonizing heavy industries initiatives and targets
GCC
countries have announced ambitious energy transition projects, including carbon
reduction technologies and hydrogen. The ultimate goal of decarbonization is to
achieve carbon neutrality. Gulf countries are taking several measures for
decarbonizing heavy industries such as, electrification, replacing thermal
driven process, investing in clean power and renewables, and launching wind
programs.
Saudi
Arabia:Saudi
Green Initiative (SGI) aims to reduce carbon emissions by 278M tons per annum
by 2030 and have 50% of its power generated from renewable sources by 2030.
Saudi Arabia's national oil company, Saudi Aramco, is also committed to
reaching net zero operational emissions by 2050.
UAE:UAE's
Energy Strategy 2050 targets a 50% share of clean energy in the national energy
mix, incorporating a blend of renewable, nuclear, and clean energy sources.
ADNOC is dedicated to a 25% reduction in carbon intensity by 2030, coupled with
plans to expand carbon capture capacity to 5 million tons by the same year.
Additionally, Masdar and Emirates Steel Arkan have outlined a roadmap to slash
carbon emissions by 40% by 2030, with a broader goal of achieving net-zero
emissions by 2050.
Qatar:Qatar
is investing in large-scale Carbon Capture and Storage (CCS) facilities to
support decarbonization initiatives and control carbon emissions and plans to
store more than 11M tons of CO2 per year by 2035. Qatar's national climate
change action plan is to reduce greenhouse gas emissions by 25% by 2030.
Kuwait:Kuwait
has several strategic projects to reduce its carbon footprint including
promoting clean energy initiatives, introducing new low-carbon technologies,
and developing long-term partnerships to exploit sustainable energy
opportunities.
Oman:Oman
has set a target of achieving net-zero carbon emissions by 2050. This is in
line with the Paris Agreement's goal of limiting global warming to 1.5°C.
Oman's National Energy Strategy, published in 2020, includes a plan for energy
transitions having a target of 20% renewables in total electricity generation
and 63% efficiency at gas-fired plants by 2027.
Bahrain:Bahrain
aims to reduce emissions by 30% by 2035 through decarbonization and efficiency
initiatives. Bahrain Steel invested US$ 250M in decarbonization efforts,
including building a roof over the iron ore materials area, establishing a
solar energy project, and allocating an industrial land plot.
Plans
and steps towards sustainable heavy industries
Leading
companies in the heavy industries sector have embraced sustainability and
decarbonization through a range of initiatives. This includes the widespread
installation of solar panels to generate energy for manufacturing facilities,
reducing reliance on conventional energy sources. Additionally, efforts such as
the implementation of oxide screen mesh have been adopted to minimize wastage,
showcasing a commitment to resource efficiency and environmentally responsible
practices. These strategic steps underscore the industry's commitment to
reducing its environmental impact and promoting a sustainable future.
What
are the impacts and opportunities for key stakeholders ?
Decarbonizing
heavy industries offers strategic benefits for stakeholders by enhancing
corporate reputation and creating opportunities in the growing green job
market. Though initial financial investments may present challenges, a
well-executed management approach, including just transitions, extensive
education initiatives, and supportive policies, is essential for successfully
navigating and capitalizing on the transformative shift towards sustainable
practices.