Leather is getting under the skin of the Middle East.
The value of leather imports and exports across the GCC was US$3.9 billion in 2013, including semi-finished and finished leather products, travel goods, accessories, handbags and footwear, according to Euromonitor International.
At nearly $2bn a year, the UAE holds the lion’s share of the leather trade in the GCC, while Saudi Arabia, which also is a big manufacturer of leather products, saw $1.1bn worth of leather imports and exports in 2013.
The UAE has had its own tannery for 10 years, Abu Dhabi’s Al Khaznah Tannery, off the Al Ain-Abu Dhabi highway. It is one of the most advanced leather-producing facilities in the world.
This does not deal in leather from cows, however, it produces camel leather – to a very high standard.
Camel leather is far thicker and more durable than bovine leather and can be used in a myriad of different ways. Camel skin is expensive but it provides another business case for farming camels and another link between the country and the animal that is fundamental to its formation and growth.
Leather is one of the world’s most widely traded commodities. The global trade in leather and leather products is worth more than $60bn per year and it is not just the brown shiny coats so beloved of Syrians or the patent black footwear sported by many a financier; leather is a catch-all phrase for a material made from the skin of an animal by tanning.
There is snake leather, goat leather, shark leather, salmon leather and, most recently appearing on the market, chicken leather, although that skin is mostly used in making fashion accessories such as earrings.
“Saudi Arabia and Iran are huge producers of leather with a large number of tanneries inside the countries,” says Benjamin Redwood, the business development manager for Leatherworld Middle East, an industry event in Dubai.
“They produce handbags and sandals, a lot of white-label goods that can be rebranded when they arrive in the country of consumption. The emerging middle class in China has been the greatest growth driver as the country demands leather clothing, furniture and accessories.”
In the UAE, Dubai in particular is becoming a hub for the mainly bovine hides coming out of Sudan, which has the second-largest head of cattle in the world after the United States, as well as Kenya and Ethiopia. Egypt is also a very important leather producer in the region with more than 200 tanneries. However, its leather industry has been running for millennia and it has a healthy domestic consumption. African countries are home to 15 per cent of the world’s cattle and 25 per cent of its sheep and goats, but only account for about 15 per cent of global output of hides and skins – 8 per cent of bovine hides and 14 per cent of sheep and goat skins.
Exports of hides and skins have fallen in recent years to below 4 per cent of total exports, yet leather is ranked very highly as an export commodity in several African countries. The countries’ can only tan 6.8 per cent of its capacity against 9.2 per cent a few years ago . At the same time, the livestock population has jumped about 25 per cent over the last decade, faster than the world trend.
The UAE is enjoying the fruits of this trend. This country imports and re-exports African leather but because the livestock is often below the standards of European and US cattle it is not often used for the needs of UAE companies. Industry sources estimate two thirds of the hides from Africa go straight to China. UAE demand is primarily for hides from Europe, Germany or Italy primarily.
“The amount of raw material from Africa is overwhelming,” says Anita Ahiadormey, the business development manager with Afriwest General Trading.
“The problem with the African livestock is the prior treatment of the family, which can effect the hide,” she says.
“Culturally, it is not a problem to hit the cattle with sticks, which marks the hide, and often they can be underfed with insect bites which, again, creates a thinner hide and it is marked from the bone.
“Of course, the price differs massively between African hides and European hides. Our clients, though, which are car manufacturers and hotels, demand the best skins, which means importing from Europe where the animals’ treatment has been exemplary, raised in beautiful, verdant pastures and [so they] have fantastic hides.”
In the UAE one of the biggest leather users is the car industry, where manufacturers will often offer a leather option on models that is not offered in the rest of the world. Afriwest will source the material from Italy or Germany and the car manufacturer will have the fabric changed in the UAE into car seat coverings. The booming hotel sector here has also given a fillip to the local leather industry. Afriwest recently supplied leather for a 300-room hotel, that can include wall coverings, chairs, sofas, footrests, lamp shades, desk and accessories – the list is practically endless. With the growing lust for leather, the business is enjoying a three-fold increase in sales year on year.
“We mainly deal in bovine hides as that is where the demand is,” says Ms Ahiadormey.
“We do get asked for exotics such as snake skin, crocodile or ostrich, which of course we can provide, but it is generally cow leather we are asked for.
“In 2014 we saw our sales triple from 2013. The luxury that people are willing to pay for here means there is always a demand. That can mean for their yachts, their cars or their houses. If they want leather shoes or clothes, that premium will already have been priced in by the designer,” she says.
“I would expect to double our sales this year.”
The rising demand has seen prices of bovine leather mainly from the West jump between 30 and 40 per cent over the past three years.
There is strong demand from the fashion industry in this country for lamb skin, reindeer pelt or goat skin because of the softness of the material. Again, with fashion, houses will ask for skins that have been treated correctly both before and after they are slaughtered. Good breeding and feeding guarantees a decent skin to start with but the tanning process is just as important in the fashion business.
The chemicals used in tanning can be very dangerous so adequate regulation is very important, something that can be overlooked in Africa. Also the environmental damage associated with mismanaged chemical treatments can be devastating.
Most leather is chrome-tanned. All wastes containing chromium are considered hazardous by the US environmental protection agency.
Waste from tanneries also includes large quantities of other pollutants, including protein, hair, salt, lime sludge, sulphides and acids. Furthermore, a chrome-tanning facility uses huge amounts of water. Leather tanning also generates tonnes of chrome shavings annually and much of this chromium waste ends up in landfills.
Hence US and European tanneries are looking for cleaner ways to treat leather. Afriwest uses an Italian tannery that recycles olive leaves, presses them to create an organic vegetable tannin, much like that used before hazardous chemical treatments.
Elsewhere it is not so clear whether the chemical concerns are high on the agenda.
Back at Al Khaznah, the Abu Dhabi facility prides itself on its environmentally friendly approach to leather production.
However, camel leather is not best suited to covering larger expanses because of the animals’ most obvious assets.
“Camel leather is getting more popular,” says Mr Redwood.
“But if you want to cover a settee, or something larger, with it, it’s hard because of the big hole that is cut in the middle; you have to cut the hide round the humps.”
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Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue
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