Abu Dhabi plans industrial giant to develop industries such as steel, aluminium and petrochemicals

New firm, Adbic, will act as a holding company and combine existing and new firms under its umbrella

The Government of Abu Dhabi, as part of its diversification plan, has begun work to create an industrial giant that mirrors Saudi Basic Industries Corp. (Sabic), and which will develop industries such as steel, aluminium and petrochemicals to spur foreign investment and create more jobs, officials familiar with the plans said.

The emirate is also planning to make major investments in its energy and industrial sectors. This will include expanding crude oil production to 3.5 million barrel per day (bpd) from the current 2.5 million bpd, and building of refineries, gas processing plants and petrochemical complexes Abu Dhabi Basic Industries Corp. (Adbic), has received its official licences to operate and absorbed its first asset, Emirates Steel Industries, from the government-owned General Holding Co., an official said.

Adbic will act as a holding company and combine existing and new industries under its umbrella, according to the official.

The creation of Adbic is integral to a government initiative aimed at restructuring the Abu Dhabi economy to encourage greater private sector participation and create jobs for the emirate's young and fast-growing population.

"The establishment is part of the diversification of the Abu Dhabi economy as the government tries to move away from hydrocarbon-based industries and to expand the industrial base of Abu Dhabi by attracting foreign investment," an official said on condition of anonymity.

Furthermore, government's diversification plans will continue to promote strong growth going forward. Dubai will continue to focus on expanding the tourism, media, commercial and service sectors. Abu Dhabi is also increasingly looking to diversify into the service sectors.

"There are many basic industries and these industries create downstream opportunities. We want to give these opportunities to young emirati entrepreneurs," the source added.

Adbic, which is owned by the Abu Dhabi government through GHC, will be run as if it were a private sector business, though it isn't clear if the company will undergo an initial public offering of its stock.

The GCC governments have floated shares in state-owned companies in recent years in an attempt to spread wealth to their populations.

In 2005, the Abu Dhabi government created Abu Dhabi National Energy Co. or TAQA, an energy investment firm, by transferring government-owned power generation and water desalination assets and then selling 24.9% of its shares.

Emirates Steel's 650,000 metric ton a year plant in the emirate's Mussafah industrial area is undergoing an estimated $ 950 million expansion to raise output to nearly 2 million tonnes annually by the end of 2010.