Salalah Free Zone, which began operations two years ago, is awaiting the setting up of two plants, one for making caustic soda and the other for producing iron pellets.

Construction is set to begin of Oswal Group of India‘s $350-400 million caustic soda plant that will have an annual production capacity of 365,000 tonnes while Bahrain’s Foulath has planned a $700 million pelletising plant to be built at the free zone as a joint venture with Japan’s JFE Steel Corporation. Plant capacity will be 6 million tonnes per year.

“Salalah Free Zone has been able to secure investments and future commitments in excess of $4 billion contributing significantly to the tremendous growth of Oman’s FDI,” said free zone CEO Awad Al Shanfari.

“There are currently around 10 medium-to-large companies operating in the free zone which include, among others, enterprises in chemicals and plastics, metals, building materials, foodstuffs and automotive. In addition, many traders and freight forwarders are working out of Salalah and five of the world’s largest shipping companies are servicing the port which is operated by APMoller Terminals,” Al Shanfari said.

Companies operating in the free zone include Octal, a global leader in PET sheets and resin, Dunes Oman, an automotive OEM, and Salalah Methanol.

Germany’s Uhde Inventa-Fischer is building a 550,000 tonnes per year PET resin plant for Octal alongside its existing facility. The new plant will vault Octal into becoming the world’s largest-single-site PET manufacturer. The company has a current PET capacity of 300,000 tonnes annually for amorphous PET and bottle-grade chips.

Dunes Oman, set up by Brakes India Ltd of the TVS Group, is doubling its current capacity of 18,000 tonnes per year. The plant was built with an investment of $20 million and the capacity hike will incur a similar investment.

Earlier this year Salalah Methanol Company announced the start of commercial production from its plant that has a daily capacity of 2,125 tonnes. The state-owned company is contributing to the industrial GDP by adding value to Oman’s crude oil and LNG production.

Well-connected hub
A significant part of the free zone is dedicated to light manufacturing and distribution activities. Salalah Port and airport are planning large investments in major infrastructure to increase capacity. Five of the major global lines use the port and zone. A planned railway will complement the existing road network and the soon-to-be expanded port and airport facilities. Salalah Port had a container throughput of 3.5 million teu in 2009.

Al Shanfari cited Salalah’s strategic geographical location, its connectivity to large markets, the incentives offered to free zone tenants and the benefits of the Free Trade Agreement with the US.

“Salalah represents a global hub opportunity for companies looking at developing competitive advantage both for sourcing and exporting materials and products to world and regional markets,” he commented.

“Salalah Free Zone is probably one of the most important levers for Oman to develop and achieve the national 2020 economic strategy and diversification goals. Oman is blessed with abundant resources in oil and gas along with several key industrial minerals. Salalah’s geographical location is probably the best asset of the free zone.”

The free zone’s vision was driven by sustainable economic development principles, suppo- rting high-value, low-carbon and entrepreneurial activities, he added.