GOLD RUSH

Ahmed Bin Sulayem, Executive Chairman and CEO of the Dubai Multi Commodities Centre (DMCC), has been with the sprawling free zone since it was established and has witnessed it grow to become the world’s biggest physical gold market. While he’s opening up to new trade, he’s still betting big on the yellow metal.

BY JASON LASRADO

Ever since Dubai first emerged as a trading hub for gold, pearls, and textiles, among other things, back in the mid-twentieth century, the trading of commodities—raw materials or primary agricultural products—has become a vital element of its economy. As of May 2023, the emirate accounted for around 25% of the global gold trading market, with much of it coming from within the Dubai Multi Commodities Centre (DMCC). The free zone has four operational gold refineries, with a fifth due to open this year. “We are literally the largest physical gold market in the world, and we’re going to continue to grow,” says Ahmed Bin Sulayem, Executive Chairman and CEO of DMCC and the Dubai Gold and Commodities Exchange (DGCX).

Having been with DMCC since it was formed in 2001, the chairman has been instrumental in making the free zone a key driver of trade and Dubai the commodity trading capital of the Middle East. Today, over 100,000 people live and work in the DMCC free zone master development of Jumeirah Lakes Towers in Dubai, a 200-hectare 87-tower business and residential community. In Q1 2023, 708 new companies registered in DMCC, a new record and an 8.4% increase compared to Q1 2022. Last year was the business district’s most successful ever, with 3,049 new business registrations, taking the total number of companies registered there to over 22,000. Roughly 10% of Dubai’s GDP flows through DMCC.

“The DMCC ecosystem is playing a vital role in promoting global agricultural trade and has become the lifeblood of the India-Africa-Middle East agri corridor,” says Sudhakar Tomar, President of India Middle East Agri Alliance, a multilateral platform that invests in Agri-startups. “Its world-class infrastructure, enabling environment, and agrispecific initiates have effectively connected buyers and sellers in the agricultural industry, enabling efficient trade execution and access to a global network of participants.”

DMCC’s subsidiary, DGCX, is the only Shariahcompliant exchange in the Middle East that trades gold futures and physical gold. In 2022, it traded gold commodities worth $10.2 billion and reported a 78% growth in total volume compared to 2021, making it the biggest commodity exchange in the region. However, it is still trailing large international exchanges. In 2022, DGCX recorded 8.2 million contracts, compared to 134.2 million contracts on the London Metal Exchange. “The high costs of connecting into Dubai for international traders have put Dubai at a disadvantage compared to other global financial centers and has seen some leave Dubai altogether,” explains Bin Sulayem. “These costs are particularly significant for high-volume traders who need large bandwidth in order to extract value. Reducing connectivity costs into Dubai would be a huge benefit to local markets by enabling more activity from international players.”

Despite this, in 2022, Dubai became the world’s largest trade hub for rough diamonds and one of the top spots for polished diamonds. “We beat Antwerp as the number one rough diamond trade center. We’re making ground on polished diamonds,” says Bin Sulayem. This has been helped by the government-backed Dubai Diamond Exchange—the only bourse in the GCC affiliated with the World Federation of Diamond Bourses— which recorded $19.8 billion in trade in the first half of 2022. “DMCC is today the center of the universe for the diamond industry,” says Shaunak Shastree, Managing Director of the International Gemological Institute (IGI) for the Middle East and Africa. “IGI has been an integral part of this journey since the beginning of DMCC two decades ago. I am perpetually marveled by the vibrant pace of activities, which make DMCC an aspiring benchmark for other diamond centers to follow.”

Away from precious metals and stones, DMCC is also one of the largest re-exporters of tea in the world. The purpose-built DMCC Tea Centre, which opened in 2005, spans 23,731 square meters and moved over 33,900 metric tonnes of tea in 2022, representing over 3,500 containers of bulk tea. It also produced 8,200 tonnes of packaged tea, including 400 million tea bags, a 27% increase compared to 2021. The center can store up to 5,000 metric tonnes of bulk teas at any given time.

And DMCC is expanding Dubai’s resources, expertise, and influence in the world of coffee, with the DMCC Coffee Centre, which opened in 2019, offering green bean storage and the processing, roasting, packing, and delivering of coffee, targeting coffee farmers, exporters, traders, roasters, and retailers. Looking to the future of commodities, the DMCC Crypto Centre, which opened in 2021, today hosts over 550 crypto firms and claims to be the largest ecosystem of crypto and blockchain companies in MENA.

Bin Sulayem joined DMCC in 2001 and became Chief Operating Officer in April 2002. By 2003, there were around 24 companies registered in DMCC, and from late 2003 to early 2004, much of its infrastructure was initially financed by an Islamic Gold Bond, including Almas Tower, a 360-metertall skyscraper at the center of Jumeirah Lake Towers.

“I owe a lot to the gold industry for building the diamond, gold, and silver tower (Almas Tower) and financing DMCC. We raised $200 million through the Shariahcompliant gold sukuk or gold bond,” says Bin Sulayem. Almas Tower was originally planned to include a 20-story hotel but became a 63-story office tower. By the end of 2004, the tower was on the market and eventually sold out to DMCC members in seven hours, according to the CEO. “I refused to engage with speculators, big brokers, just directly to our members,” he adds. He is now overseeing the development of DMCC’s latest real estate project, the Uptown Dubai district.

Bin Sulayem was made executive chairman of DMCC in 2007, and by 2008, it had more than 1,400 registered companies. Despite the global financial crisis, in 2009, over 2,000 companies registered in the free zone—and on average, roughly the same amount registered annually between 2009 and 2020, according to Bin Sulayem.

However, it hasn’t all been smooth sailing. In 2016, Bin Sulayem represented the U.A.E. as the chairman of the Kimberley Process, an international group of 85 countries tasked with regulating the global diamond trade. At the time, it was the first and only time an Arab country had been appointed to the annual chairmanship. When Dubai’s chairmanship was announced, the organization’s civil societies declared a boycott, with their main concern being transfer pricing, whereby diamonds are priced below market value in order to pay fewer royalties and taxes to the countries producing them before being sold at market price from places like Dubai. In response, Bin Sulayem announced that the Organization for Economic Cooperation and Development would collaborate with the Kimberley Process to create a universally-recognized pricing method for rough diamonds. This initiative helps countries that rely on diamond exportation for their income, enabling them to sell diamonds at a more valuable price.

He also faced a challenge in 2017 when the U.A.E. was planning to introduce VAT for the first time, including in the trading of commodities such as precious metals and stones. Bin Sulayem was one of the highest-profile voices to lobby against the decision, which was reversed in 2020. “Import duties on rough and polished diamonds would have killed the market,” he explains. “This nation was founded on the principles of a tax-free environment for import and re-export.” He became CEO of DMCC in 2019.

The U.A.E. will chair the Kimberley Process again in 2024. Ahead of that, Bin Sulayem is now preparing for the Lab-Grown Diamond Symposium in 2023. He equates the lab-grown diamond industry to the cultured pearls that disrupted the pearling industry in the last century. Lab-grown diamonds cost less to manufacture, have a lot more versatility than traditional diamonds, and can be used for a wider range of designs and other applications in other industries, such as semiconductors and electric vehicles. “Diamonds can make devices much smaller because they dissipate heat faster. They are used for rocket science, for space, but

I find it hard to believe they will be an important component of future electric cars,” he confides. “But if I don’t capture the factories, the businesses now, they will settle somewhere else, and then it’s too late to promote and make these diamonds more mainstream.”

In the meantime, the commodities expert remains bullish on the future of gold as an asset. In 2012, Bin Sulayem released the U.A.E.’s first bullion gold coin with an image of Sheikh Khalifa Bin Zayed. Since then, he has launched coins featuring Sheikh Mohamed Bin Zayed with an image of Abu Dhabi’s Louvre Museum, Sheikh Mohammed Bin Rashid with an image of the Museum of the Future, and Sheikh Hamdan Bin Mohammed Bin Rashid with an image of the Palm Jumeirah. He believes everyone should hold some gold. “Gold was always seen as this commodity that’s good for big banks, and sometimes government transactions, and it’s too much to handle for the normal person. That’s not really the case,” he stresses. “It’s a way of protecting yourself from inflation. It’s a way of protecting yourself from the currency crashes.

“Gold is not going anywhere.”