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Ducab plans new $136m cable project

Dubai, November 24, 2009

UAE cable manufacturer Ducab plans a new joint venture project worth Dh500 million ($136.1 million) to help expand public sector electricity networks, the firm's managing director said on Tuesday.

Located in the Jebel Ali area, the new facility is a joint venture with Dubai's Water and Electricity Authority (Dewa) and Abu Dhabi's Water and Electricity Authority (Adwea), each holding a 25 per cent stake, Andrew Shaw told Reuters.

"We plan to start production in about 12 months time and the objective for the project is to supply both Dewa and Adwea with the high voltage cables needed of their expansion."

The UAE mainly imports high voltage cables from the Far East and Europe, due to the limited number of manufacturers and the high volatility of copper prices, the main component in production, said Shaw.

"The copper price has been quite volatile so the prices of cables vary with the changes so the government really wants to ensure consistent supply that's why the manufacturing is being shifted here."

Commodity prices plummeted as the global credit crisis intensified in September last year.

Copper for three months delivery on the London Metal Exchange fell to around $6,874 a tonne on Tuesday, versus $6,950 a tonne on Monday, when it rallied to $7,010 a tonne, its highest since September 2008.

"We import copper cathode from places like India, Australia and Chile and we use 100 percent hedging to secure supplies meaning that the orders are back to back, so we have no problems with supply," said Shaw.

This year, Ducab's revenues are expected to be 18 per cent lower compared to 2008, as the economic crisis had affected demand levels, said Shaw.

"But having both Dewa and Adwea take in this new project will be good a foundation for the business as they will be given priority in buying the cables," he said, adding about a third of the production will be exported to Gulf states. – Reuters




Tags: Dubai | Dewa | adwea | Ducab | cable |

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