Business | Investment

Sukuk studied to fund Emirates Glass expansion

Minister of economy inaugurates Dh700m upgraded manufacturing facility in Mussaffah

  • Gulf News Report
  • Published: 00:00 March 20, 2012
  • Gulf News

Sultan Bin Saeed Al Mansouri, Minister of Economy, tours the Emirates Float Glass factory
  • Image Credit: WAM
  • Sultan Bin Saeed Al Mansouri, Minister of Economy, tours the Emirates Float Glass factory after inaugurating it. This the only float glass facility in the region.

Dubai: Dubai Investments is negotiating with investors and financial institutions to fund a second phase of the Mussafah manufacturing unit of Emirates Float Glass which was officially inaugurated yesterday.

Khalid Bin Kalban, Managing Director and Chief Executive Officer of Dubai Investments, said his company is also exploring a sukuk to fund the expansion.

Sultan Bin Saeed Al Mansouri, Minister of Economy, officially inaugurated the upgraded Emirates Float Glass (EFG) factory, a subsidiary of Glass, which is wholly-owned by Dubai Investments, at the Abu Dhabi Industrial City in Mussafah.

Capacity

Built at a cost of over Dh700 million and covering 320,000 square metres, the factory has been partly operational since 2009.

With the completion of phase 1, it has the capacity to produce 600 tonnes of clear molten glass per day and over 190,000 tonnes of glass products per annum. In addition to clear glass, EFG also produces a wide variety of tinted (bronze, grey and green) and reflective coated glass.

Bin Kalban said: "As an integrated glass processing facility that serves markets around the world, Emirates Float Glass is central to Dubai Investments' vision for the future of the glass industry. "The project is of strategic importance to the UAE's industrial development and is in line with the government's objective of focusing on the industrial sector, which has the potential to contribute up to 25 per cent to the country's GDP."

Emirates Float Glass aims to add a second phase to the Mussafah manufacturing unit, he said.

"We are currently in negotiations with various regional investors including banks and institutions that have indicated interest in financing the project for a loan of nearly $200 million (Dh734 million).

"We will also explore the option of issuing a sukuk or Islamic bond to finance the expansion of the second production line in the EFG factory.

"The second phase of the facility, poised to be the largest in the UAE, will add another 600 tonnes a day of capacity, including ultra-clear low iron glass, bringing the total to 1,200 tonnes per day."

Deleverage

The move comes as Eur-opean banks are starting to withdraw from non-core markets as part of their efforts to deleverage and build up their capital buffers, which might make fin-ance more expensive.

"Although the economic reliance on European bank funding varies across the GCC, the retrenchment of these banks could have two outcomes: Firstly, a short-term liquidity squeeze which could in some cases be moderated through temporary liquidity support from governments and central banks, as well as the GCC banks' own efforts to improve their liquidity positions since the last ‘crunch' in 2009," credit rating agency Moody's said.

The factory is the only float glass manufacturing facility in the region with a fully automated production line from receiving raw materials to packaging products.

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