Ducab planning Dh875m expansion

Dubai: Ducab — one of the region's largest cable manufacturers — is likely to register an 11.84 per cent growth in production of cables this year to 85,000 tonnes, up from last year's 76,000 tonnes, a top official said.

"Due to growing demand, Ducab has expanded its production capacity to 110,000 tonnes per annum, which could go up to 160,000 if need be. This shows that the market is revamping which is a very positive sign for Ducab," Ahmad Al Shaikh, chairman of Ducab, told Gulf News in an interview.

However, a steep decline in the base copper price might reduce last year's turnover of Dh3.35 billion to Dh2.5 billion.

Despite this, the manufacturer is investing Dh875 million in capacity expansion, including a Dh250 million plant in Qatar and a Dh500 million high-voltage cable plant in Dubai.

Ducab, which employs about 980 professionals, is also restructuring its production to maximise efficiency.

"Despite the current global economic crisis that has impacted the UAE and GCC markets, we feel the capacity of Ducab will be needed to be uplifted as demand is expected to pick up from 2011 onwards when more projects are implemented."

Ducab is investing in capacity expansion. We will soon commission a Dh125 million copper rod plant, which is currently undergoing testing and commissioning," he said.

"We will soon commission a 25,000 tonne capacity cable manufacturing plant in Qatar, set up with an investment of Dh250 million."

Faster return

The government earlier announced a new high-voltage cable project to be developed by Ducab. The high-voltage cable (400kw) project will be 50 per cent owned by Ducab and the rest will be equally split between the Dubai Electricity and Water Authority (Dewa) and the Abu Dhabi Electricity and Water Authority (Adwea).

"With two major customers of high-voltage cables on board as shareholders, the project is guaranteed to offer a faster return on investment," Al Shaikh said.

The high-voltage unit will be operational by the end of 2010. Construction of the project has already started and we expect the equipment to arrive by the second half of next year.

"With this we will manufacture high-voltage cable and extra-high-voltage cables. We will be the first manufacturers of such cables in the Middle East. So it is an important project for us and a very significant development in our business," he added.

The UAE cable demand is about 180,000 copper tonnes per annum in which Ducab has roughly a 50 per cent share. Cable demand across the GCC is about 770,000 tonnes per year.

"We are striving to achieve a 25 per cent market share in the region," Al Shaikh said.

A steep decline in the base copper metal price from its peak of $8,300 per tonne in 2008 to the current $2,800 in the international market will impact Ducab's annual turnover this year.

"Last year, our turnover reached Dh3.35 billion, up from Dh2.42 billion in 2007. Fluctuation in base copper prices might reduce the turnover.

"This year, we expect this to reach Dh2.5 billion, simply due to the lower metal price, although our production will be higher," he said.