x Abu Dhabi, UAE Thursday 20 July 2017

The UAE alchemist who turned fields of scrap into a factory of gold

From the dusty beginnings of the UAE to the biggest gold refinery, forge and mint house complex in the Middle East, Munir Al Kaloti has enjoyed a remarkable journey

Munir Al Kaloti, the chairman of the Kaloti Jewellery Group. Delores Johnson / The National
Munir Al Kaloti, the chairman of the Kaloti Jewellery Group. Delores Johnson / The National

Munir Al Kaloti is an alchemist.

In his possession are rare tools with which he works his lucrative and ancient craft: Aqua Regia, the "royal water" that can dissolve pure gold; furnaces that glow amber and red at 1,100 degrees to melt crucibles of precious metal into a fiery liquid; supercharged electrolysis plates that attract particles of gold like a magnet. He has them all.

But, as is the case with all true alchemists, Mr Kaloti's fortune began as nothing more than a rag-tag collection of scrap metals that he wrought over half a century into what is today the biggest gold refinery, forge and mint house complex in the Middle East.

Forced from his home in Jerusalem in 1968 by the Arab-Israeli conflict, Mr Kaloti arrived in Abu Dhabi three years before the Federation was born.

"The first visa I got to come to Abu Dhabi came from the British Consulate in Amman, Jordan. There was nothing like the UAE at that stage. There was only the Abu Dhabi emirate, the Dubai emirate. You could not travel freely in those days between Dubai and Abu Dhabi, you needed a visa."

He arrived in the country with nothing but his education from the American University of Beirut and the discipline imparted to him over years as a high school student of Anglican missionaries at St George's school in Jerusalem.

"At that time I remember there was not one asphalted road in Abu Dhabi," he says. "Not one building over one floor. The buildings were mainly clay. It was the very, very beginning of the country, the very beginning."

He did not have to struggle to find shelter or sustenance though, as he remembers the people of Abu Dhabi, although poor, were very generous.

"When I got here the first thing I found were very nice people, very welcoming people, very poor people really. But very kind very welcoming," he says.

"They had nothing, there was no electricity connection at all. I stayed as a guest with some friends who had no electricity, only a generator for the lights in their simple house. But they put me up."

The big oil companies were just arriving in the UAE and with them came the construction crews, the pipeline layers, the derrick diggers, all of them leaving behind an unholy mess of scrap metal in the sand.

And it was in this industrial rubbish heap that Mr Kaloti - who today sits behind a large hardwood desk at the centre of a US$32 billion (Dh117.53bn) global gold empire - saw his fortune.

"I will be frank with you, I was collecting the dirt," he says with a chuckle of resignation. "Big companies, they have lots of scrap left over from their fields. A lot of cables, copper cables. A lot of batteries, a lot of metals. Copper, nickel, lead. Non-ferrous metals. These are very expensive items. So that was the start."

But soon his business outgrew Abu Dhabi and he packed up his trusty Land Rover for the move to Dubai.

Back in Jerusalem, Mr Kaloti's father had been in the food business, importing and exporting all over the region.

So once he arrived in Dubai, the young Mr Kaloti opened up a second line alongside his now growing scrap metals trade importing food for his father's outfit, which had landed a big contract supplying the Dubai defence force.

The shift into food took his life in yet another direction as Mr Kaloti soon came into close and regular contact with Sheikh Rashid, the Ruler of Dubai.

"I would go to Zabeel and see Sheikh Rashid. He used to sit outside his palace so that everybody who had a request or a problem could go in his turn. He would be there sitting and smoking his pipe, his very famous pipe, on the wooden seat and people who have businesses or who want things - Europeans, Arabs, everybody - would come. He met everybody."

Around the time of Ramadan each year Sheikh Rashid would buy huge quantities of meat for his people to provide for their Iftar meals and Eid celebrations. The people lining up in front of his palace would petition a certain quantity of livestock and the Sheikh would strike a bargain with Mr Kaloti to import it.

"They love goats here at that time of year because of the heat," Mr Kaloti says. "Lean meat you see, in the heat you cannot eat fat. In Europe or Alaska you eat fat to keep warm, but here they do not need it."

Sitting next to Sheikh Rashid would be an official, Mr Kaloti remembers. "At that time it was the president of Balidia, the municipality, his name was Khamal Hamza. He would say to me, OK, you are bringing the livestock."

And then the bargaining would begin.

"Sheikh Rashid would say: 'Hello, how are you?' to me and he used to bargain very hard with me. Whatever he needed I would supply. He would say he needed 20,000 or 30,000 head of goat."

Mr Kaloti would explain to Sheikh Rashid the cost of air freighting such a huge quantity of live goats into Dubai from Australia or Turkey or wherever he could find them and the negotiation would continue.

"They usually sell livestock by two, the jift we call it. Not one but two kids or lambs. 'How much this year for the jift?' he would say. Then he would always say: 'No, no, that's too much. You have to drop the price'. And you know you can't bargain too long. I give a little bit of a discount for him and then he calls the municipality manager and he says, OK, book 20,000 or 40,000 whatever it is and that's it, deal done."

Mr Kaloti swipes his palms together swiftly to signify the successful end of negotiations, a gesture he has surely performed more times than most.

There was no gold business to speak of in Dubai at that time. There were handfuls of Indian jewellers and traders making simple rings and other trinkets by hand in the dusty streets around what is now the gold souq, but the essential elements of a real gold trade - the assaying laboratory, the forge, the mint house and the modern jewellery shops you could trust did not exist.

"There were some products coming from here and there, Yemen mainly and Bahrain. But these people here were very much more interested in the pearl. Pearls were more important here than gold before we came here," Mr Kaloti says.

His son-in-law Monzer Medakka had just arrived in Dubai armed with a degree in jewellery making from Italy. He had served apprenticeships with some of the greatest goldsmiths and jewellers in Europe and was ready to start his own business.

"We moved to a small operation we called Kaloti jewellery with my son-in-law Monzer. He studied this in Italy, he came here young and he asked for my daughter and I wanted to take care of him. So we started this one window shop with four or five people to make some ornaments like rings and pendants. Very primitive things."

The business started with a single kilo of gold purchased from Tawfiq Abdullah, the founder of the region-wide jewellery chain, Damas. That kilo of gold cost Dh40,000 - today the same kilo would cost $60,000.

"Tawfiq is now buying hundreds of kilos from us every day," Mr Kaloti notes with pride.

At the same time he started a gold assaying business. "We were the first company in Dubai to be certified by the government to assay gold for people. If they want to go to court or disputes they would come for our assay.

From this small beginning the bullion business was born at a factory that still sits on its original site in Sharjah.

"Dubai was much more open than the surrounding countries. It is a free country, no taxes, big logistics operations, flights going in and out from all over the world. People carrying scrap gold and gold from mines in Africa and Asia were coming in more and more and they are asking who can handle this, who can buy this?

"So we said: 'Why not? This is our line, so why don't we see what we can do'."

Before long they were inundated with business.

"People would come per day, two times," Mr Kaloti remembers with a hint of incredulity. "They would buy their gold and come do the deal and fly back to buy more and come back again in the same day."

Today the company has offices in Hong Kong, Istanbul and Singapore. It has struck a deal to build a refinery and a mint house in Surinam to service Latin America and has plans to open similar operations in eastern Europe.

Mr Kaloti's expansion plans are ambitious indeed.

The rising price of gold - in the past five years it has almost doubled from $890 to about $1,600 - has driven the rapid growth of Mr Kaloti's gold refinery so that they are producing annually about $32bn of gold bars and bullion for an ever-expanding client list.

"We have reached our capacity here in Sharjah. We cannot expand any more," Mr Kaloti says.

"For this reason we are moving to this new site with the DMCC which will be the biggest in the region and among the top 10 biggest in the world."

The factory in Sharjah produces a maximum of 300 tonnes of gold a year. The new facility will produce as much as four times that amount.

"We would be happy to get it to 1,000 tonnes annual production in the first couple of years. After that 1,450," Mr Kaloti says with no noticeable degree of excitement.

He is talking about tens of billions of dollars worth of gold but might as well be talking about scrap metal, or goats. It is all the same to him.

As if to underscore the point, the walls of his office are hung with pictures taken at every stage of his career, from his graduation at which he delivered the valedictorian speech, to a recent snap with the president of Surinam.

In one he appears as a young man with a bristling moustache next to half-a-dozen or so cubes of compressed scrap aluminium. In another he pours a crucible of molten lead into a mould. He is outside in what looks like a junkyard.

From the pride with which he shows off these scenes in his plush, modern office one can tell Mr Kaloti, despite the intervening decades, is still the same smiling young man in the junkyard, brimming with a confidence that pours from the pictures like the molten gold he makes.

"I told you - I was collecting the dirt, packing it in drums, selling it, shipping it."

Only in the UAE does the scrap man end up with a factory filled with gold.

 

jdoran@thenational.ae