The map of UAE. Image Credit: CIA Factbook
United Arab Emirates (UAE) is a part of the Middle East and is located between Oman and Saudi Arabia, bordering the Persian Gulf and the Gulf of Oman. The total area of the country is 83,600 km2, and its population was 6,940,000 in 2017. The country mostly experiences extreme dry desert climate.
The major natural resources of the UAE are petroleum and natural gas. The discovery of abundant oil reserves has transformed this desert country into an advanced nation with high standards of living. For the last 30 years, oil and global finance have been the driving factors of UAE's economy with its per capita GDP on par with leading West European countries. The GDP of the country was $407.5 billion in 2017.
UAE has an open economy policy. In 2012, exports mainly consisted of crude and petroleum oil which contributed to 38%, natural gas (5%), diamonds (9.5%) of the country’s total exports.
Overview of Resources
UAE is the eighth largest producer of crude oil in the world accounting for 3.3% of the total crude oil production. As of 2015, UAE had 97.8 billion barrels of proved crude oil reserves.
The country is the seventh largest producer of natural gas accounting for 1.6% of the world’s total natural gas supply. As of 2014, UAE has 6 billion cubic meters of proved natural gas reserves, which is the seventh largest in the world.
UAE is one of the top suppliers of aluminum foundry alloy, high-purity aluminum, and extrusion billet to more than 45 countries. It accounts for 3.4% of the world’s aluminum smelter production.
UAE also produces refined petroleum products, gypsum, lime, cement, sulfur, and steel.
Metals
In the first half of 2018, Dubai Gold and Commodities exchange recorded a 44% increase and was involved in more than 11.3 million contracts that resulted in a trade value of $250 billion during that period.
In 2016, Abu Dhabi ports, in agreement with Emirates Aluminum Rolling (EMiroll), built an aluminum plant in Khalifa Industrial Zone (Abu Dhabi). This plant will have a production capacity of 65,000 tonnes of aluminum coils per year.
In 2010, Emirates Steel completed phase 1 of its expansion project for the integrated steel complex in Abu Dhabi Industrial City at Taweelah, which costs about $810 million. In 2013, Abu Dhabi industrial conglomerate, Senaat, decided to plan an expansion of Emirates Steel Industries, the steel manufacturing unit.
Industrial Minerals and Gemstones
Dubai Diamond Exchange (DDE), a subsidiary of Dubai Multi Commodities Center (DMCC), is a leading diamond trade center in the world. In 2016, DDE traded both rough and polished diamonds amounting to about $26 billion. The diamond trade volume jumped to 268.7 million carats from 178.1 million carats in 2009. UAE was the sixth biggest exporter of diamonds in 2017, and it exported $8.4 billion value worth of diamonds in the same year.
UAE has many cement production projects lined up, but the projects are yet to take off as the production capacity of existing cement plants is more than the local demand. In July 2018, JSW Cement proposed to set up a $150 million clinker plant in Fujairah in UAE. This plant is expected to be finished in 2019.
In 2013, UAE’s urea output doubled as Ruwais Fertilizer Industries Ltd. (Fertil) set up a new production unit.
Around six million tonnes of sulfur are produced every year in UAE, and in July 2018, Abu Dhabi National Oil Company declared to double the sulfur production in the next decade.
Fossil Fuels
Despite the fact that UAE has the world’s seventh largest natural gas reserve, the country struggles to supply sufficient quantities of natural gas to meet the growing demand of the domestic market. In 2014, UAE imported 18 billion cubic meter of natural gas from Qatar. It also exported eight billion cubic meter of LNG. Thus, it is the only country that is a natural gas importer and LNG gas net exporter. In total, 11.9 cubic meter of natural gas was imported into UAE in 2014.
Investment
Realizing its mineral fuel potential, the government of UAE has increased funding to create more jobs, expansion of infrastructure and opening up utilities to more involvement from the private sector.
UAE's free trade zones are meant to attract foreign investment by providing foreign investors the opportunity to have 100% ownership and zero taxes. Nevertheless, the country will have to face the following challenges to ensure high-level of economic progress:
- Dependence on oil
- Large expatriate labor force
- Increasing inflation pressures
In an attempt to overcome these challenges, the government has committed to diversify and create multiple opportunities for locals by improving the education system and increasing job opportunities in the private sector.
Experts estimate that UAE’s economy is likely to progress at a modest rate of 3% in the next five years. During this period, the country’s government has planned to invest $60 billion to increase the production of its gas and oil reserves. It also plans to continue investing in nuclear and renewable energy sources and advanced technologies.
Australia has also struck a nuclear cooperation agreement with UAE to supply uranium for aiding the operations of four nuclear power plants that are expected to be functional by 2020.
As a precaution to Iran’s threat to shut down the Strait of Hormuz, UAE started a pipeline to pump oil from its east coast terminals, thereby bypassing the disputed strait. The pipeline transports 500,000 barrels of oil to Fujairah oil terminal on the Gulf of Oman, to Pakistan.
With the government of UAE actively promoting its mineral fuel industry and taking elaborate steps to ensure the smooth progress of its mining production, future prospects for the country’s mining sector look bright.
Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.
Sources and Further Reading
This article was updated on 2nd November, 2018.
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