The chemicals industry’s competitive trends

Kuwait

Faisal Malallah, CEO of Al Kout Industrial Projects, talks to The Energy Year about the company’s role in Kuwait’s economy and the trends which are currently shaping the Kuwaiti chemical industry’s competitive landscape. Al Kout Industrial Projects (AIP) is a Kuwait-based regional manufacturer and supplier of various chlor-alkali chemicals.

How important is Al Kout Industrial Projects’ role in the Kuwaiti economy and its energy value chain?
We contribute indirectly to the drinking water that reaches every house in Kuwait. We supply the chlorine that the Ministry of Electricity & Water & Renewable Energy (MEW) injects into the water to sanitise it. Without it, there is no drinking water in Kuwait. We are the only local supplier for MEW.
Kuwait constitutes about half of our business. The energy sector is around 25% of our gross profit. We supply hydrochloric acid to KOC’s contractors to conduct their drilling and hydraulic fracturing operations. We also supply KNPC and KIPIC with caustic solutions for their refining processes.
Here in Kuwait, we have our Shuaiba production facility, with a capacity of about 160 tonnes per day, producing approximately 50,000 tonnes of chlorine gas per year. Our plant in Abu Dhabi, producing 40 tonnes per day, supplies the local market in UAE.

What is the rationale for your partnership with Nalco Champion?
It is a strategic partnership in which Nalco Champion imports basic raw materials to Kuwait and we mix them in our plant with other chemicals to make the final product. This partnership reduces the logistics cost for Nalco Champion and, at the same time, gives us the chance to enter different chemicals markets. The finished products are marketed and sold under Al Kout.

What synergies are derived from the company’s logistics subsidiary?
Our fleet of trucks and tankers gives us a huge competitive advantage in the region. We can move our products a lot further than other competitors can. We find that competitors sometimes have a hard time reaching out to customers because they don’t have the necessary fleet. It requires a lot of investment to do, both in capital and human resources. However, we have been building it over time. The high return on investment here in Kuwait helped us do that, and now we have a huge fleet of more than 60 trucks.

Where do you see more growth happening for Al Kout Industrial Projects?
As Kuwait is increasing its oil production, hydrochloric acid is going to be in demand for drilling and fracturing.
Our new KWD 6-million [USD 19.5-million] ferric chloride plant, inaugurated in December 2021, is now able to cater solutions to the wastewater treatment segment. Kuwait consumes about 10,000-15,000 tonnes of ferric chloride annually. However, there are no local producers, so this demand was mainly covered by imported products from India and China. Now, AIP can supply the local market and the Gulf region.
Additionally, we are seeing MEW, for example, changing their technology of injecting water with chlorine for sanitising. Instead of chlorine, they are now switching to a new chemical called chlorine dioxide. That’s something that’s changing in their process. They’re making new stations to inject that chemical, and we see ourselves also exploring to diversify our product portfolio accordingly.

Which are the trends shaping the competitive landscape of the chemical industry in Kuwait?
Supply chain disruptions in the past few years have put our in-country manufacturing facilities in an advantageous position, as logistics prices went up and made our products more competitive. Now that the logistics prices are going down, China is starting to export more.
Also, demand for one specific chemical can shift because new technologies are introduced, or new markets are created. That’s why we must always be on top of market intelligence and see what’s going on and what’s changing in the world so we can anticipate trends.
An example is the shift from chlorine to sodium bichloride for water treatment. Another example is the shift from electrodialysis, which uses electricity to refine seawater and turn it into salt, to reverse osmosis, which is a much more efficient technology.

What role can Al Kout Industrial Projects play in the achievement of Kuwait’s Vision 2035 manufacturing expansion goals?
I think AIP can play a major one, as local producers of chlor-alkali chemicals in Kuwait are very few. We can see ourselves trying to expand and support the government by producing what they need. If they are looking for certain chemicals or a certain capacity, we can work hand in hand with them to support that. We have the know-how, the expertise in operation, and safety, as well as the logistics. We can get into that, which will benefit both the country and our shareholders.
I see us being one of the leading chlor-alkali producers in the region. Once we make our expansions into Saudi Arabia and Jordan, we’re going to be a large producer here in the region. We see that as a big opportunity for us, and we hope to see a breakthrough soon.

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