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Abu Dhabi, UAESunday 24 June 2018

DP World takes stakes in Kazakhstan special economic zones as Borealis inks deal with UCC

Borealis and UCC agreement to build petrochemicals project in Central Asian republic

Mark Garrett, CEO, Borealis says planned petrochemicals plant Kazakhstan would significantly strengthen Borealis’ position in the CIS markets. Satish Kumar / The National
Mark Garrett, CEO, Borealis says planned petrochemicals plant Kazakhstan would significantly strengthen Borealis’ position in the CIS markets. Satish Kumar / The National

Dubai’s DP World agreed to acquires takes in two special economic zones in Central Asian Republic of Kazakhstan, the latest in a string of acquisitions by the world’s fourth-biggest port operator as it continues to expand its global footprint.

DP World plans to buy a 51 per cent stake in the Khorgos special economic zone and a 49 per cent shareholding in the Aktau zone, the company said, without specifying the value of the two deals or how it plans to fund them. The two framework agreements signed in Abu Dhabi on Saturday will give DP World management and governance rights of the economic zones, it said.

“Kazakhstan is an important link in the New Silk Route and in the development of the Belt and Road Initiative,” said Sultan Ahmed Bin Sulayem, the group chairman and chief executive of DP World. “Focusing on soft and hard infrastructure development that supports multi-modal transport links will be key in realising its potential.”

DP World has already been providing management services to the Port of Aktau, Kazakhstan’s main cargo and bulk terminal on the Caspian Sea, and Khorgos economic zone, on the China-Kazakhstan border.

The Nasdaq Dubai-listed port operator has been aggressively expanding and strengthening its presence in different regions worldwide. It acquired two new assets in Peru and India earlier this month as it ramped up its investments in the fast growing South Asian and Latin American markets.

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The company, along with India’s National Investment and Infrastructure Fund (NIIF), bought a majority stake in an Indian logistics and warehousing firm, as part of $3 billion spending plans. In Peru, the company acquired Cosmos Agencia Maritima, for $315.7 million.

Separately, Austria’s Borealis, a unit of the Abu Dhabi’s Mubadala Investment Company, and Kazakhstan’s United Chemical Company (UCC) plan to build a major petrochemicals facility integrated with an ethane cracker in the central Asian republic.

The two companies completed the pre-feasibility study on the project and signed a joint development agreement (JDA) in Abu Dhabi, Borealis said on Saturday. The partners also signed a separate government support agreement with Kazakhstan’s sovereign wealth fund Samruk-Kazyna for the project.

A memorandum of understanding (MoU) was also inked by ministers of energy from the UAE and Kazakhstan to cooperate on a 500 kilo-tonnes per annum polypropylene Samruk-Kazyna-backed project, which is currently under construction. The signing ceremony was also attended by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces and President of Kazakhstan, Nursultan Nazarbayev.

The Borealis-UCC project now moves into the feasibility study phase, which is expected to run until the first quarter of 2019 after which a local joint venture between the two companies is expected to be formed, the companies said.

“This project would significantly strengthen Borealis’ position in the CIS markets …. [with] significant potential for development of advanced PE business based on our Borstar technology,” said Mark Garrett, Borealis chief executive.

The final investment decision on the project is expected to be taken in 2020 and start-up would be scheduled for 2025, the firm added, without specifying the estimated value of the project.

Mubadala owns a 64 per cent direct stake in Austria’s Borealis. OMV, which holds the remaining shares in Borealis, is 25 per cent owned by the Abu Dhabi-based investment company.