Surging commodity markets are leading Gulf states to invest in mining concessions for everything from coal to copper. Claire Ferris-Lay reports on the latest moves by the UAE sheikhdom of Ras Al Khaimah to dig deep for profits.
The most northerly emirate of the UAE is just an hour's drive from the booming metropolis of Dubai but has none of the skyscrapers and shopping malls that its larger-than-life neighbour is known for around the world.
But Ras Al Khaimah (RAK) supplies much of the raw material that has gone into building Dubai's famous skyline which is why the emirate is now seeking to gain more control over the raw materials that are needed to feed the region's seemingly insatiable building industry - coal to fire cement plants, copper to make pipes and wires and nickel used to make stainless steel.
Madhu Koneru is the man leading the emirate's efforts to invest in global commodity markets through the fledgling RMMI - a joint venture with the state-controlled Ras Al Khaimah Investment Authority (RAKIA) and Trimex, a UAE-based raw mineral conglomerate where he is the executive director.
His passport reads like a mineral map of the world with stamps from Armenia, Indonesia and the Democratic Republic of the Congo.
If a foreign real estate developer comes in and builds a building and the government doesn't like it, they can demolish it but in our case we go in and take the product away," he says.
The soaring cost of construction is forcing the Gulf nations to find new ways of safeguarding future supplies.
On June 20 coal futures traded in London climbed to a record high pushing the cost of delivery to US$188 a metric tonne, according to Bloomberg data. In the base metals market, energy shortages in major producing countries will continue to rise according to Credit Suisse.
"We see current prices of aluminum, copper and nickel as a good entry opportunity for longer term oriented investors," the financial institution said last week.
Analyst projections for key metals such as copper, zinc, nickel and iron ore and industrial minerals such as coal, suggest that demand could double or even triple over the next 25 years. Global energy needs are projected to grow by 55% up to 2030 with usage of fossil fuels, dominated by coal, estimated to grow 84%.
RAK, with a long history of mining, set about securing supplies for its industrial growth three years ago and is now bidding to become a leading industrial centre for the Middle East.
Vying to become the Middle East's leading mining solutions provider may seem unusual given the lack of natural resources in the region, but the world's dynamics are changing, says Koneru.
"Nobody ever would have thought that the Middle East would import coal for example. But Oman has already announced it and RAK is looking at it so the dynamics in the world are changing.
Coal is now firmly on the agenda of many Middle East countries. Both Oman and Dubai are already weighing up the possibility of using the fuel and Egypt is also seriously looking at it as an alternative to other fuels.
At the same time Ras Al Khaimah Cement Company announced last week that it is carrying out a feasibility study which could see it switching to coal from gas. Fujairah Cement Industries and Gulf Cement Co are both already importing coal, traders say, and Union Cement also in RAK will switch to coal next month.
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