A senior government official says that stronger ties with Africa are essential to secure the raw materials needed for industrial development in the UAE.
African ties vital for raw materials
Stronger ties with Africa are crucial to secure the raw materials needed for industrial development in the UAE, a senior government official has said.
"This is very important, of course. Africa is very rich in raw materials, and some kind of raw materials are needed in our region, such as bauxite," said Khalid Al Ghaith, the Assistant Foreign Minister for Economic Affairs.
Mr Al Ghaith this week travelled to Ghana, where the government-owned Abu Dhabi National Energy Company, known as Taqa, commenced an expansion programme at its power plant in the town of Takoradi in the country's Western Region. Ghana is in need of additional electricity, and it is also one of Africa's biggest producers of bauxite.
Government-related entities are leading the push to deepen ties that provide investment opportunities abroad, but also give access to minerals that are needed by basic industries at home.
In November, Mubadala signed a bauxite supply agreement with Guinea that will allow a state-backed miner in the African country to increase production by a third.
Bauxite is an essential ingredient to aluminium production, one of the industries key to economic diversification in the Emirates.
Dubai Aluminium (Dubal) and Emirates Aluminium (Emal) both operate huge smelters in the Emirates, and have an eye on expansion. Emal, a joint venture between the Abu Dhabi Government-owned investor Mubadala and Dubal, is undergoing a US$4.5 billion (Dh16.53bn) expansion that will increase its capacity by 550,000 tonnes per annum to 1.3 million tonnes by next year.
The smelter is the flagship project of the massive new Khalifa Industrial Zone in Taweelah, the epicentre of Abu Dhabi's industrialisation drive.
Ghana's bauxite deposits and the UAE's quest for industrial commodities provide a strong incentive for further cooperation between the countries, and is part of government policy.
"We will do our best to strengthen the relationship between Ghana and the UAE," said Mr Al Ghaith
But Ghana and the African continent have more to offer than supplies of important minerals.
Strong growth in demand for electricity and insufficient natural gas supplies present investment opportunities in Ghana's power sector, and government-controlled Taqa has announced its attention to seek more deals in the country.
"The [project] has been very successful, we should look to other ways to extend that," said Frank Perez, Taqa's head of power and water.
Taqa's plant is Ghana's first independent power project (IPP), a public-private partnership that relieves the government of the need to front the investment capital and operate the plant. The model has convinced decision-makers in Accra.
"As the first IPP in Ghana, [the plant] has demonstrated that public-private partnerships are workable in Ghana. And we intend to explore further such partnerships," said John Mahama, Ghana's president, at the groundbreaking ceremony.
The Abu Dhabi investor can also count on support from the UAE government.
"We are really behind our companies, especially our sovereign companies," said Mr Al Ghaith.
Ghana has been plagued by power shortages in recent months, after a pipeline carrying natural gas from neighbouring Nigeria was disrupted. As a provider of electricity - the lifeblood to economic development - Taqa is building goodwill that will benefit it and the UAE in future.
For the company, this will open the doors to further projects in the country, and Taqa is already eyeing deals in Ghana's fledgling oil and gas sector, where priority is now given to producing gas for domestic consumption. It also regards Ghana as a springboard to West Africa and the wider continent.
For the UAE, the political capital accrued by investing in Ghana's infrastructure could come in handy if bauxite mining contracts come up for grabs.
Ghana's main bauxite mine in Awaso was bought by China's Bosai Minerals Group from Rio Tinto in 2010.
Taqa's involvement in Ghana's power sector will help the UAE compete with resource-hungry China if other mines become available, and further expansion in Africa by the company is of wider strategic significance for the Government.