Following the great success achieved in both Jubail and Yanbu industrial cities in attracting international investments in key industries including petrochemicals and metals, the initiative to have second phases for the cities is but a natural course.

Greater liquidity from a buoyant energy sector has encouraged local businessmen to invest in downstream industries and organise tie-ups with established overseas companies for making their projects more cost-efficient and competitive in international markets.
Jubail and Yanbu are together responsible for contributing huge volumes of petrochemicals and putting Saudi Arabia in the forefront of the global industry in that sector.
An overwhelming portion of Sabic’s 49.1 million tonnes of production comes from the two cities. With ongoing projects, that figure is set to rise to 64 million tonnes by the end of 2008.
Jubail 2 and Yanbu 2 are handling the momentum from their first phases and are poised to stay busy for the next 30 years or so.
The two industrial cities are now undergoing ambitious infrastructure expansions. Jubail II and Yanbu II are already housing manufacturing facilities and are preparing to accommodate hundreds of other plants that are expected to be set up in the next few years.
Jubail II – moving rapidly
In the last 25 years Jubail I received $64 billion worth of capital investment, but with the $56 billion Jubail II project, the industrial city will double in size, says the Royal Commission for Jubail and Yanbu (RCJY). It believes the new industries emerging in Jubail will constitute a prototype for industrial development across the kingdom.
“Although 15 per cent of the site is now prepared, 2007 will see work on the complex ramped up significantly with some 45 contracts scheduled to be awarded this year,” it says.
At the end of January, the first invitations to tender were issued to companies expected to bid for a contract to build a vast new petrochemicals facility at the city’s port.
Infrastructure work to provide access to the various sites is under way and contracts to develop residential areas to support the huge influx of workers expected in the city will be handed out his year.
Jubail II is predicted to create 55,000 new jobs and meet the city’s expansion requirements for the next 30 years.
“With a new wave of industries rattling at its gates, this new infrastructure development is essential to promoting investment in Jubail and to meeting the unprecedented demand for industrial and residential services,” says Mubarak Al-Mubarak, director-general for planning and investment at the RCJY.
Critically, Jubail II will serve a clear and present need in the country’s industrial infrastructure. While questions have been raised about the necessity of all six economic cities, Jubail has become the focus of Riyadh’s growing ambition in developing the scope of its petrochemicals sector.
“The kingdom’s petrochemicals industry has seen a huge expansion in the last five-to-seven years and they simply ran out of space at Jubail I,” says Leroy Levy, a partner at Trowers & Hamlins.
“The government has set out to expand production and develop the downstream industrial sector. Where previously, the country sold the majority of its ethylene to the international market, a significant proportion is now staying in the country and used to produce more complex products. An entirely new industrial base is being created which has produced the need for Jubail II.”
This approach is central to the rationale behind the new project. Unlike its predecessor, companies will not be permitted to join Jubail II unless their proposal includes ambitious plans for expanding the scope of their on-site operations. Timewasters need not apply.
“Companies joining Jubail II are required to cluster their industries, not just make one product and sell it off,” says Hector Estrada, programme manager at Bechtel, the US-based engineering group that has a 30-year relationship as consultant to the RCJY.
“Whatever these companies produce, they also have to produce downstream products under the strategic plan for the entire country established by the government.”
The stringent requirements for a successful application have not deterred private contractors eager to join the project. Demand for a place in the new complex has been enormous. “There has been huge demand. The available land at Jubail II is oversubscribed by 170 per cent,” says Estrada. “It has taken more than 30 years for some companies to start production at Jubail I. Around 30 per cent of the land at Jubail I is still under development, Jubail II is moving much more rapidly.”
The commission continues to wade through the technical bids of applicant companies, assessing each proposal to decide which best meet the requirements for downstream production. Meanwhile, building at the site moves on and links with other national industrial projects are planned.
“Potential synergies with the Ras al-Zour mining and industrial zone are being explored by the Royal Commission and Maaden (Saudi Arabian Mining Company),” says Al-Mubarak. “A new phosphate mining and granulation complex and an aluminium smelter and refinery are planned at Ras al-Zour, which could result in a number of downstream industries that could be located in Jubail.”
Riyadh and the commission are determined to make Jubail a breeding ground for future generations of Saudi industrialists and engineers. Work begins this year in preparing land for the city’s new engineering college, due to open in 2010 or 2011. “Jubail represents an invaluable proving ground for Saudi workers and managers,” says Al-Mubarak.
“A quarter of all Saudis in the kingdom’s industrial sector are now employed in Jubail Industrial City, and the national importance of this cannot be underestimated. The planners of the 24 new Saudi industrial cities announced last year have an excellent template.”

Yanbu II, Increment I
Already five projects have been inaugurated at Yanbu II Increment I. In the basic industries category, Saudi Aramco Lubrication Oil Refining Co (Lubref) has set up a plant at a capital investment of SR1.6 billion ($426 million).
The secondary industries category has plants by National Titanium Dioxide Co (Cristal) (SR750 million); Hamrani-Fusch Petroleum Co (SR38 million) and Marjan Industrial Waste Treatment Co (SR100 million).
In the light industries arena, Qahtani Pipe Coating Company has a plant established at an investment of SR80 million.
As regards expansions of existing projects, there are two in the secondary industries category that have held ground-breaking ceremonies. These are National Titanium Dioxide (SR750 million) and Safra Company (SR710 million).
Grass-root projects under construction in the basic industries section include the Yansab plant (SR18.7 billion) and National Petrochemical Company or Yanpet (SR2.8 billion).
In the secondary industries category, Yamamah Reinforcement Bars Co’s project is under construction (SR240 million).
Several grass-root projects are in the design stage. They include:
 Basic industries – Capital Metal Co (SR700 million) and Saudi Aramco Export Refinery (SR18.7 billion).
Secondary industries – Marafiq Electricity and Water Co (SR6 billion); Mineral Oils Plant (SR47 million); Sidiq Company for Painted Sheets (SR675 million); Aton Company for Metal Industries (SR1.3 billion); Saudi Tyre Fabrication Co (SR400 million) and United Glass Company (SR400 million).
Light industries – United Gypsum (SR54 million); Yanbu Packing Materials Co (SR 6 million); Saudi Italian Artificial Ceilings Co (SR55 million).
Some 11 companies have applied to establish grass-root industries. They are:
Basic industries – Obaykan Petrochemical Refinery (SR60 billion); Riyadh Iron Company (SR910 million); Nab Development and Investment Co (urea and ammonia project) (SR3.7 billion); Arabian Urea Fertiliser Co (SR1.6 billion), Arabian Samad Co (SR1.65 billion) and Good Performance Petrochemical Co (SR15 billion).
Secondary Industries – Nab Hydrogen Peroxide Co (SR182 million); A Hashim Co for Industrial Equipment and Gases (SR35 million); Balurat Al-Bilad Co for Flat Glass (SR600 million); Rizq Metal Forming Co (SR570 million) and Adwan Chemicals Co (SR255 million).
According to the Royal Commission, the total surface area of Increments I and II will amount to 66 sq km. The estimated cost of the development of Yanbu II is SR12 billion.
“The number of industries in Yanbu Industrial City by the end of the City’s development plan (2005 – 2020) is expected to reach 50 key and secondary grass root industries in addition to 50 light industries,” it said.  “The anticipated volume of investment for the establishment of these industries is estimated at more than SR210 billion. These industries are projected to provide over 23,000 new employment opportunities. Demand for industrial and residential lots is also expected to grow to meet industrial expansions and all related infrastructure services, such as construction of power and water distribution grids, roads and communication facilities.”
The Royal Commission has stressed it is committed to providing all basic infrastructures and services related to various industrial and residential activities.
Yanbu’s contribution to the national economy is already considerable.  According to the Royal Commission. Yanbu Industrial City accounts for 25 per cent of the kingdom’s industrial local product and 22 per cent of total foreign industrial investments in the kingdom.
The total workforce in all economic sectors in the city is 31,000 and the population of the city is 86,000.
The total area of Yanbu Industrial City is 18,465 hectares, of which industrial land accounts for 5,910 hectares. Of the industrial land, 2,563 hectares is developed and the remainder undeveloped. Residential land accounts for 4,511 hectares of which 1,587 is developed. Some 8,044 hectares is allocated as “Support Land.”