MMC Corp Bhd yesterday proposed to buy the rights to jointly develop a third container terminal at Jeddah Port, a project estimated to cost about RM1.8bil.
The rights, which will be acquired for a nominal sum, would see MMC take a 20% stake in a consortium that will build the new Tusdeer Container Terminal at the port. The new terminal will have three berths with a total capacity of 1.5 million TEUs (20ft equivalent units). Construction works are expected to start early next year for completion by 2010.
“This deal will further expand MMC’s footprint internationally in the ports business and complement our strategic focus in Saudi Arabia and other countries in the Middle East and North Africa,'' group chief executive Feizal Ali said in a statement yesterday.
“We will leverage on our experience in developing and managing our two ports in Malaysia and replicate our success in one of the most dynamic regions in the world,” he added.
The latest deal will see MMC acquire the 20% stake from City Island Holdings Ltd, which is owned by Datuk Mohd Taufik Abdullah and Bahari Hamzah.
The balance 80% will be jointly held by Saudi Industrial Services Co (Sisco), Xenel Industries Ltd and Saudi Trade and Export Development Co.
City Island had on March 5 this year signed a joint development agreement with Sisco, Xenel and Saudi Trade to participate in the development and operation of the third container terminal.
Besides the development rights, the project partners have been awarded a 30-year concession to jointly operate the terminal.
The new deal comes a year after MMC was awarded the rights to develop and manage the new US$30bil Jazan Economic City in Saudi Arabia.
MMC said the Jeddah Port was located along the Red Sea and close to the southern entrance of the Suez Canal, one of the world’s most important international waterways that handle more than 30% of the global container trade.
“As the largest and best-equipped port closest to the southern entrance of the Suez Canal, Jeddah Port is well-placed to take advantage of the container ships passing through the canal,'' MMC said.
The port's existing two container terminals handled 2.9 million TEUs in 2006, about 76% of the total Saudi container port throughput and more than 60% of the total throughput handled by Red Sea container ports west of Saudi Arabia, the company added.
MMC said Tusdeer Container Terminal would cater to the increased need for container handling facilities in Jeddah arising from the strong growth in the region.
“The new facility will offer accessibility to larger vessels up to 12,000 TEUs and faster turnaround time to attract container lines.
“The Tusdeer terminal will be a best-in-class facility which will provide a direct outlet for the import-export business of Jeddah’s hinterland and also attract hub-and-spoke and relay transhipment,” the company said.
In the statement, Feizal said MMC was optimistic of the opportunities brought about by the growing Saudi Arabian and other economies of the region.
“The Red Sea region has seen strong throughput growth averaging 14.6%, with volumes increasing from 1.15 million TEUs in 1995 to 4.48 million TEUs in 2005,” he said.
“Jeddah Port itself has seen strong throughput growth from both its hinterland areas as well as transhipment. This trend points to the need for the port to expand to accommodate future growth,'' he said.
Feizal expects the project to break even in the third year of operations.
The rights, which will be acquired for a nominal sum, would see MMC take a 20% stake in a consortium that will build the new Tusdeer Container Terminal at the port. The new terminal will have three berths with a total capacity of 1.5 million TEUs (20ft equivalent units). Construction works are expected to start early next year for completion by 2010.
“This deal will further expand MMC’s footprint internationally in the ports business and complement our strategic focus in Saudi Arabia and other countries in the Middle East and North Africa,'' group chief executive Feizal Ali said in a statement yesterday.
“We will leverage on our experience in developing and managing our two ports in Malaysia and replicate our success in one of the most dynamic regions in the world,” he added.
The latest deal will see MMC acquire the 20% stake from City Island Holdings Ltd, which is owned by Datuk Mohd Taufik Abdullah and Bahari Hamzah.
The balance 80% will be jointly held by Saudi Industrial Services Co (Sisco), Xenel Industries Ltd and Saudi Trade and Export Development Co.
City Island had on March 5 this year signed a joint development agreement with Sisco, Xenel and Saudi Trade to participate in the development and operation of the third container terminal.
Besides the development rights, the project partners have been awarded a 30-year concession to jointly operate the terminal.
The new deal comes a year after MMC was awarded the rights to develop and manage the new US$30bil Jazan Economic City in Saudi Arabia.
MMC said the Jeddah Port was located along the Red Sea and close to the southern entrance of the Suez Canal, one of the world’s most important international waterways that handle more than 30% of the global container trade.
“As the largest and best-equipped port closest to the southern entrance of the Suez Canal, Jeddah Port is well-placed to take advantage of the container ships passing through the canal,'' MMC said.
The port's existing two container terminals handled 2.9 million TEUs in 2006, about 76% of the total Saudi container port throughput and more than 60% of the total throughput handled by Red Sea container ports west of Saudi Arabia, the company added.
MMC said Tusdeer Container Terminal would cater to the increased need for container handling facilities in Jeddah arising from the strong growth in the region.
“The new facility will offer accessibility to larger vessels up to 12,000 TEUs and faster turnaround time to attract container lines.
“The Tusdeer terminal will be a best-in-class facility which will provide a direct outlet for the import-export business of Jeddah’s hinterland and also attract hub-and-spoke and relay transhipment,” the company said.
In the statement, Feizal said MMC was optimistic of the opportunities brought about by the growing Saudi Arabian and other economies of the region.
“The Red Sea region has seen strong throughput growth averaging 14.6%, with volumes increasing from 1.15 million TEUs in 1995 to 4.48 million TEUs in 2005,” he said.
“Jeddah Port itself has seen strong throughput growth from both its hinterland areas as well as transhipment. This trend points to the need for the port to expand to accommodate future growth,'' he said.
Feizal expects the project to break even in the third year of operations.