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Abu Dhabi, UAETuesday 25 September 2018

Exclusive: Senaat plans to seek exemptions from metals tariffs for its subsidiaries

The UAE's industrial holding company has two companies in the base metals sector

Jamal Al Dhaheri, chief executive at Senaat. Reem Mohammed/The National
Jamal Al Dhaheri, chief executive at Senaat. Reem Mohammed/The National

Amid heightened global tensions related to trade wars, Abu Dhabi’s industrial holding company Senaat plans to procure waivers from the United States for its commodities businesses, while it continues to review plans for initial public offerings of its subsidiaries.

“Whatever can be given [we] will help the business as best as we can,” Jamal Al Dhaheri, chief executive at Senaat told The National.

Abu Dhabi’s Senaat manages Dh27.2 billion worth of assets for companies, including the UAE’s largest steel producer and two entities from the aluminium sector. The holding company is mandated to execute industrial sector activity in the UAE through investments in metals, oil and gas services and construction, as well as food and beverage manufacturing.

Emirates Steel, whose rebar, wire rod and heavy steel are exported to markets in North America, was expected to have suffered “limited impact” from the imposition of steel tariffs by the US administration under President Donald Trump, its chief executive said in an interview in March.

The White House imposed a 25 per cent tariff on imported steel and 10 per cent on aluminium in March, as it sought to crush what it saw as “dumping of steel” from manufacturers in China. Imposition of tariffs against metals, including $267 billion (Dh980.7bn) worth of Chinese goods and doubling of levies on Turkey's steel and aluminium exports last month led to a slump in the base metals market in August.

Emirates Steel, which ships five per cent of its exports to the US said following the tariffs imposition that it would seek other routes and markets to sell its products.

Working around tightening tariffs was still on the agenda for the entities under its portfolio, said Mr Al Dhaheri.

“We need to adjust ourselves to the laws and regulations, and accordingly, we shuffle our market depending on how it’s impacted,” said Mr Al Dhaheri.

“We have our relationship with government institutions [and] they are lobbying and looking to push in the favour of their local producers in order to address the challenges they have,” he added.

The UAE is reported to be working behind the scenes to “quietly mitigate” the impact of tariffs on the industry, with efforts underway to procure an exemption from the White House to import into the US without the newly-levied duties.

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A review is under way to float some of the companies under Senaat's portfolio and the firm has said it was weighing market dynamics before taking the plunge.

“It’s an ongoing review. We review half a year or annually at least," said Mr Al Dhaheri. "We look at status, market conditions, right timings and all of that, so it’s always a view. At the moment, I don’t see anything soon that could happen but it’s always under review.”

An IPO would take place, he added, when companies are adequately structured for listing.

Abu Dhabi’s stimulus package of Dh50bn announced in June would likely result in driving additional inflows of foreign direct investment and piquing international investor sentiment to the local market.

“In terms of international investors, we’re always going to attract FDI into Abu Dhabi and hence ensure there is enough liquidity in the market, there is enough dynamic as well to ensure a sustainable model later on post-IPO,” he added.

Senaat, which recently opened a $240m aluminium extrusions factory in a venture with private sector Al Ghurair Group said it was open to both greenfield and brownfield investments. However, value-added business ventures will be a sweet spot for the industrial holding firm in the near future, said Mr Al Dhaheri

“It doesn’t matter where it is, always we’re looking at ways to increase recycled material [in] the process, which will it make more green,” he said.

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