Dubai’s Al Khaleej Sugar gets go ahead to build beet factory in Spain

Dubai’s Al Khaleej Sugar, owner of the world’s largest port-based sugar refinery, received the green light to build a factory in Spain, extending its reach beyond the Middle East and North Africa.

The company plans to start construction of the plant in Merida next year, said managing director Jamal Al Ghurair. The agreement between its subsidiary Iberica Sugar and Spanish authorities was signed on Friday, he said.

The move comes as Al Khaleej seeks to expand to sugar-beet processing, with a factory in Egypt and now one in Spain. The company’s business in Dubai, which processes raw cane sugar, has seen thinner margins in recent years due to bigger supplies from the European Union and India, while some of its biggest markets opened factories of their own.

“We are doing a similar thing to what we did in Egypt,” Al Ghurair said by phone late Friday, adding that the company had finally managed to expand into Europe after a failed attempt in the UK.

The new factory will require an investment of about 500m euros ($590m) and will produce as much as 900,000 metric tons of sugar a year, he said. That’s about the size of the factory in Egypt that the Jamal Al Ghurair group invested in. Operations in Spain are expected to begin in 2024.

Al Khaleej, which profits from refining raw sugar and redistributing it in the Middle East and North Africa, has faced rising competition in the region. It lost markets like Iraq as the country imposed a duty on white sugar imports after building its own refinery.

In 2018, when Al Ghurair announced the investment in Egypt, he said there was “a paradigm shift from cane to beet” in the global sugar market.