Earlier this year Sohar announced it would build a 4.5m tonne terminal for handling grains and sugar, along with flour and sugar mills and a basic food processing facility, with the aim of taking advantage of its location outside the Strait of Hormuz. But now the port is looking further ahead, and wants to build on these basic industries to develop more value-added food processing industries.
Its current plans centre around the port itself, with all of the announced facilities to be built close to the waterfront, including a 10-hectare site for Al Ghurair Investments’ food processing plant. But beyond the port is Sohar’s 4,500-hectare free zone, which it is developing in 500-hectare sections, with the first one nearly full.
Soft drink potential
Along with the food processing facilities, the port is also developing both a US$600m PET packaging facility and a US$385m aluminium rolling plant. The combination of these opens up some interesting possibilities, according to Sohar CEO Andre Toet.
“Soft drinks could well be perfect for the free zone. Packaging juices and those kinds of things, that could be a beautiful thing to develop in the logistics area in the free zone,” said Toet. “We created this strategy approximately two years ago, and by signing these types of contracts now, like sugar, grain, the Ghurair contract, in quite a short period of time, it shows us we are on the right track. These three basic food industries will help us accelerate and attract other agribusiness as well.”
“And also the sugar – if you think about downstream activities in the free zone with the sugar refinery, they are countless. We have a feel that our strategy is working, because we have contracts in place, in a very short period of time,” he added.
Sohar’s plans are ambitious, and will rely on the under-construction transport links, including the GCC rail network and new, fast roads to Saudi Arabia.
But according to Shailesh Garg, director and general manager at Drewry, a shipping consultancy, while the Omani port will have a fight on its hands from established players such as Jebel Ali and Saudi Arabia’s Red Sea ports, it could be able to carve out a niche for itself as a food processing hub, especially targeting East Africa, a traditional market for Oman.
“Sohar will have competition from the UAE, no doubt. But having said that, it doesn’t mean they don’t have a chance and shouldn’t try it. Again, this is in line with a wider strategy – in Oman, they see the manufacturing sector as a major source of new employment. They will definitely have to move into the non-oil economy, and there food processing comes as one of the chosen focus areas,” said Garg.
“Many European companies prefer the Middle East, first because of the logistical advantage, and second, even if they want to supply to the subcontinent or Africa, the Middle East is better in terms of quality control. So they can have higher confidence in quality by setting up in the Middle East,” he added.