Egyptian cement sector in focus
Once again the Egyptian cement sector has gained a limelight in the past few weeks as fierce debates raged over the acquisition of major cement companies as well as the disorder in export consignments done by the multinational foreign companies operating in Egypt.
Cement market has calmed down when the government announced the expansion of the ownership base of some cement companies, according to experts.
About ten major multinational cement companies of huge investments have entered the Egyptian market that lead to a marked increase in production and quality, But experts are still skeptical that an acquisition would occur in this strategic sector.
Latest statistics show that an English company owns 88.5 percent of Alexandria Portland Cement Co., a French company holds 94.7 percent of He1wan Portland Cement Co., a Portuguese company owns 91.4 percent of Amriya for Cement, Mexican company owns 90 percent of Assiut for Cement and finally 95 percent of Beni Sweif Cement Co. owned by a major French Co.
As a result, a big leap has been witnessed in the cement price in the last few months reaching L.E. 270 per ton yet its real cost does not exceed L.E. 100 per ton, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
Therefore, calls were raised for accelerating the issuance of the anti-monopoly law in a bid to protect local consumers from the acquisition of major companies known as "Market Share Agreement."
According to Mohamed Ali Hassan, chairman of one of major public sector cement companies, the cement sector is one of the fastest growing sectors.
He pointed out that Egypt's total cement production hits 35 million tons annually while the local market's needs do not exceed 25 million tons.
The surplus in cement production which accounts for 10 million tons are oriented for export, mostly directed to Brazil, Spain, Jamaica, Italy as well as African and some Arab countries.
Volume of cement exports during the first quarter of 2004 reached 2.53 million tons compared to 742,400 tons in the corresponding period of 2003, rating an increase of 29 percent.
This makes Egypt one of the greatest five world cement exporters, according to latest report released by the H.C. for Brokerage and Portfolios.
Amidst a flurry of activity for infrastructure and mega projects in recent years, a new production line will be established by Qena Cement Company with total production capacity of 1.5 million tons annually totally directed for export.
Total investment cost of the project is estimated at $ 80 million and capable of providing 1000 jobs.
The supply and demand gap has emerged in the industry in recent years which is one of the major problems facing cement producers.
Firstly, the demands of the infrastructure of mega- projects and urbanization activities undertaken by the government as well as the growth in construction operations by the private sector.
Over the last few years, the government opened up this industry before strategic investors via privatizing them and by the year 2001 some 50 percent of Egypt's cement industry has been privatized.