|Essa Al Ghurair, chairman of his investment company Essa Al Ghurair Investment.|
DUBAI, UNITED ARAB EMIRATES — Dubai’s Essa Al Ghurair Investment Co. is considering bidding for flour mills that Saudi Arabia is preparing to sell to private investors, Bloomberg reported on Nov. 23.
The plants would add to flour mills it has in Oman and Lebanon, said Essa Al Ghurair, chairman of his investment company, Essa Al Ghurair Investment, in an interview in Dubai Nov. 23. Saudi Arabia is reorganizing its nine state-run flour mills into four companies to sell to the private sector.
The restructuring of the Grain Silos and Flour Mills Organization (GSFMO) created a new name for the mills, the General Organization for Grains (GOG).
The flour milling sector has been for several years targeted for privatization by the Saudi government. The new milling companies will serve as clients of the GOG to process and distribute wheat flour for fees to government-approved customers at agreed subsidized prices. The new mills would be allowed, if they so choose, to import their own wheat shipments for the processing of non-subsidized flour and the production of upscale quality bakeries and pasta.
“We are studying this. This is something that could happen in one and a half to two years,” Al Ghurair said. “It’s not so difficult to adapt to the Saudi environment.”
Saudi Arabia’s last wheat farms just stopped production as part of a government effort to save the aquifers supplying them. For the first time, the nation will rely almost completely on wheat imports in 2016, a reversal from its policy of self-sufficiency.
“The privatization will allow the sector to contribute in the field of manufacturing flour and feed by attracting local and international investors in order to raise operational efficiency and the introduction of new technologies and increase the competitiveness and increase employment opportunities and raise the quality of the product,” said Abdulrahman bin Abdul Mohsen al-Fadhli, minister of agriculture and chairman of GSFMO. “It will also give the institution in the future the possibility of new roles in the field of strategic storage of food security.”
Most of the revenue of the private mills is expected to come from the milling fees charged to the GOG.
Saudi Arabia’s nine flour mills have combined daily milling capacity of 12,630 tonnes of wheat, and process about 3.3 million tonnes of wheat a year, according to the USDA’s agriculture specialist in Riyadh.
Essa Al Ghurair is also chairman of Al Ghurair Resources, part of Dubai’s Al Ghurair Investment LLC, founded half a century ago by Essa’s father, Abdullah Al Ghurair, whose net worth of $6.7 billion makes him the richest person in the UAE, according to the Bloomberg Billionaires Index. The list doesn’t include royalty or rulers where wealth is held by the state.
The younger Al Ghurair’s investment company took a 40% stake in a 120 million-dirham ($33 million) flour mill being built at the Sohar port in Oman. The rest is owned by Oman Flour Mills Co. Switzerland’s Bühler AG was selected to provide the equipment for the plant, providing a new type of flour in Oman, Al Ghurair said.
Essa investments is also considering opening a coffee roasting plant in Algeria and has an agreement with India’s Usher Agro Ltd. for a rice mill and beans plant at Sohar port, he said.