Picture the scene. It’s late at night on January 4, 2010, and the world’s tallest building has just opened to a spectacular fireworks display. Thousands of people have gathered in the centre of Dubai to celebrate the unveiling, with millions more watching around the globe.
Sitting quietly amongst the front row of VIPs, assembled just yards from the building to witness this historic event, is Mohamed Alabbar. The chairman of Emaar, and the man credited with building the Burj Khalifa, is deep in thought, saying little to anyone.
“The Burj was over. I was thinking where to go, what to do next? Yes we got there, but we’re human beings, so when we get there we say ‘So what are we going to do after this? Are you going to crawl and go back in a little hole?’ I can tell you this, that’s not me.”
What happened next is in many ways as impressive as the iconic tower that Alabbar and Emaar have built. Away from the property giant, the company’s boss has been spending an increasing amount of time on his own private venture, a mining company with extensive operations largely in Africa. The result is that, barely two years since Africa Middle East Resources (AMER) was created, Alabbar has created a mega mining empire. Formed in partnership with the legendary Malaysian businessman Tan Sri Syed Mokhtar Al Bukhary, Alabbar now has his sights on exploring commodities in a big way: coal, copper, oil and gas, gold, bauxite, iron ore, phosphate, uranium… you name it, and the chances are Alabbar is mining it somewhere in Africa.
And it is a business that he has big plans for. “I am telling you if I don’t take this 6/7 times up easily it’s a waste of time. I would say give me three years to create a $10bn company. I’m very determined about that… We can go much higher. We work seven days a week day and night, that’s the only way we do business. Because that’s the only way to create anything. That’s me. I’m passionate about what I do and I go all the way,” he says.
Of that there is no doubt: we may have just come through the worst financial crisis in living memory, and the property market may still be on its knees, but make no mistake: Alabbar never has been one to stand still, and is not about to start now. Not quite a comeback, given he never left, but after spending an hour in his company, you get the feeling this is Alabbar 2.0, an upgrade on the original version that even Steve Jobs would do well to match. Like 1.0, the charm, warmth and sincerity have been retained, but 2.0 has extra passion, enhanced drive and greater speed.
“For certain people, it is difficult to stop and be useless. Time is a very valuable commodity. I guess the ability of man is that when you are in a field that is slowing, you can also take it easy because you can’t fight the environment. But in reality you can fight it. And that’s why I have changed and I have refocused on some of the businesses I know,” he explains.
He is doing a pretty good job of that. AMER has already started working in Guinea-Conakry, Madagascar, Uganda, Niger, Gabon, Ghana, Congo and Equatorial Guinea.
No country in Africa is out of bounds, with Alabbar admitting that Zimbabwe is also on his radar.
“I might invest (in Zimbabwe) under the current conditions, I might. You can wait till everything is fine and be behind the queue. I don’t want to do that,” he says, adding: “What we do is invest in concessions; we go into the exploration part of the concession. We start early. We don’t invest in concessions that somebody has de-risked. You really have to run and get involved with governments, de-risk it, send your geologists in, send your drilling teams in — so it's a lot of work, but the uplift is much better than someone having his permits after doing the drilling.”
Now is clearly a good time — the price of gold is at its highest ever, recently crossing $1,500 per ounce, with silver also rocketing up and described by Alabbar as “the new gold.” And on the business arena, there is no shortage of action in the industry, with big bucks to be made.
Canada’s Barrick Gold recently launched a $7.1bn takeover offer for Perth-based copper company Equinox Minerals, just as Rio Tinto finalises its bid for Sydney-based Riversdale Mining. Like AMER, they all have one thing in common: stable companies in stable countries, with interests in what is arguably an unstable continent with big resources: Africa has 60 percent of the world’s diamonds, 40 percent of the world’s phosphate and 30 percent of worldwide cobalt reserves. Namibia and Niger hold 7.1 percent and 2.4 percent of world uranium, Gabon has significant manganese and Zambia possesses 3.4 percent of world copper and 3.6 percent of world cobalt.
And when it comes to commodities, few have a track record as good as Alabbar’s. Between 1992 and 2003, his work at the Dubai Aluminum Company Ltd (DUBAL) was nothing short of phenomenal, with production rising from 200,000 tonnes per year to 700,000 tonnes, thanks largely to the new (and what was deemed high-risk) technology that he invested in. Having got more than a taste for the commodities business, he is confident about where the action is.
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Alabbar explains: “I always tell people that all these wonderful ladies who have been purchasing diamonds, the majority has been coming from Africa. Which means that for over 200 years there are people who have been running good businesses in Africa. And so I ask myself why? Why can’t we do this business? Call it unstable, call it risky, call it whatever you want to call it. If it’s unstable or it’s risky don’t go there. Why should you bother? Well I like to bother, I’m spending a lot of time there. Is it easy? No way, it’s not easy. But I know what can be done.”
He adds: “All my life, I always looked at the supply and demand for everything — prices of onions, prices of sugar — commodities and natural resources. Now I am back to my natural resources days I realised it is a fabulous opportunity business wise.”
It isn’t just Africa: through another company Gulf International Investment Group (also with his Malaysian business partner), Alabbar has just inked a joint venture deal with CHINALCO to develop a $1.6bn aluminum smelting plant in the state of Sarawak, Malaysia. There is also talk of more projects in South East Asia, including Indonesia, not to mention his hugely successful clothing retail chain RSH, which is active in thirteen countries through its 800 stores.
Add this all up, and it’s not unreasonable to suggest that Alabbar — until now known primarily as the highly regarded boss of a huge public company — is also wealthy in private. Given the valuation for AMER, which he part owns, he could well be taking his place in this year’s Arabian Business Rich List for the first time. But he doesn’t seem impressed with such a notion, and clearly personal wealth is not driving him.
“Honestly? I don’t care I’ll give it all away. Listen, as we age we are careful about what we eat. What do I wear? Same old fabric. Okay I have a few expensive habits but we are simple human beings. I think I want to contribute it back. We are going to do a lot of good work within the communities in which we work in Africa. How much do you need anyway? How much? I’m a man who if I take more than two meals a day I am sick. If you want my energy and my productivity just give me one meal a day. And I can run,” he says, adding: “The numbers are important. Analysts, bankers, investors, they want the numbers. But the ability to go into a new continent and walk the streets and learn and see how people live. That I can go somewhere else and make a difference and succeed, I think it’s a great thing for my soul. You need much more than money.”
All this leads to the obvious question, which is, erm, isn’t he meant to be running the region’s biggest property company Emaar? Is the man who created the giant now planning to step away from it? Alabbar insists this is absolutely not the case.
“Emaar is my love. It is part of my DNA. I’m here; I give 80 percent of my time to the company but I have another new team that runs this (mining) business and I give them 20 percent of my time and I support them. I don’t think I can wind down from Emaar, it is in my blood, it is what I am known for and what I know how to do best for the company and the shareholders. My passion and my heart is Emaar and that won’t change,” he says.
But surely he is a little, just a little, fed up with the demands of answering to shareholders, analysts and fund managers? The last Emaar AGM was no easy ride, with the chairman having to tackle some difficult questions and the company’s share price last Monday May 2 of AED3.24, despite a recent surge, is way off the AED11.8 recorded exactly three years ago. “I’m frustrated with bureaucracy, I’m frustrated with negative minds and negative thinking because I’m a go getter, I’m going places all my life. But that’s okay, these are things you have to deal with,” he says.
As the interview ends, Alabbar looks out of his window in admiration of the adjoining Burj Khalifa development. I ask him whether, rather than focusing so much energy on his new venture, he is not tempted to repeat the success of the Burj Khalifa and Downtown development elsewhere in the world.
“The truth? My dream was and still is my dream to take this fabulous development and to replicate in some of the major cities of the world like Jakarta, Cairo and Mumbai. And then of course the crisis hit. But if your mind is in search mode, opportunities are abundant. But if you stop and think ‘Oh no, I have to take a plane to Uganda, are there any mosquitoes there? Will there be anyone I know there? Will they hurt me?’… Well I suggest you sit at home, relax, sip your tea, see your friends and be happy. But if you want to jump, you better take the risk and jump.”
One thing is for certain, Alabbar will not be at home sipping tea anytime soon.
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“Maybe I was wrong”
When I interviewed Mohamed Alabbar in January 2010, I asked him whether he believed the property market had bottomed out. “Without a doubt, without a doubt,” he replied. Pressed further, I asked whether he would advise his own son to buy property in Dubai. “Yes, absolutely,”he said.
Alabbar’s contention that the market had at least bottomed out — and his later forecasts that it would rise within two years — now appear off beam, with every forecast and expert suggesting the last twelve months have seen huge drops. Some analysts suggest another 20 percent fall in prices could be on the cards.
So fifteen months on, does he stand by his original prediction? “Maybe I was wrong,” he says, explaining that the number of flippers in the market was far greater than anyone had expected.
“We underestimated how many (flippers) were out there. But it’s human nature. Everybody wants to flip and make money, it’s not against the law. It happened in America, it happened in Singapore. It’s just the percentage of flippers here was just huge,” he says.
Does Alabbar believe the worst is now over for the sector? “No I don’t think so. A year ago I thought two years. Today I would say it’s not clear.”
However, the Emaar chairman remains positive on the long term outlook, especially for the company. “I think the time has come for Emaar to roll to an incredible level. You know the story of the phoenix, it always rises up. It’s that rise that is coming again and I think in the history of man, three years of difficult times are nothing in the life of cities and companies, so I think we are ready to go on another swing. Not all strategies work at the same time. We are working on something which we will announce soon.”