Egypt’s cement export has the challenge of increasing in its price by $15 per tonne compared to global prices, according to Medhat Istvanos, head of the cement division of the Chamber of Building Materials, affiliated to the Federation of Egyptian Industries.
Istvanos attributed this increase to Egypt’s energy price hikes, following the government’s decision to increase energy prices in June. Consequently, Egyptian cement products lost their competitive edge as well as their promising export markets.
“However, the country has succeeded in exporting some cement shipments over the past year, but the government’s bureaucracy has eliminated export hopes,” he added. “The liberalisation of the Egyptian pound exchange rate created an opportunity for export, but the bureaucracy prevented exports, as a result of rising costs which led to the absence of the only positive purpose of the flotation.”
Exports of cement production amounted to $57m during the first half of the current year.
He elaborated that 40% of the cement production capacity is out-of-commission in Egypt, and went on to say that investments of the stalled capacities are estimated at EGP 100bn, and the volume of investment in the cement industry exceeds EGP 0.25tn.
The number of operating cement factories in Egypt’s market registered at around 23 factories, of which 80% are affiliated to the private sector.
He called on decision makers to develop innovative solutions, in order to promote the cement industry in the coming period, noting that the use of coal is a national security issue, and Egypt needs to have multiple sources of energy, and not rely on a single energy source.
“The cement industry is facing unprecedented challenges as the volume of production exceeds the volume of consumption by 50%-60%. The production capacity of cement factories is estimated at 84m tonnes, while the volume of consumption has not exceeded 54m tonnes for the past four years and it’s still ongoing, which means a surplus of 30m tonnes,” he explained. “I do not expect an increase in cement consumption during the coming period.”
The continued increase in production costs, as a result of some economic reform decisions, led to an increase in the cost of the price of cement. The increase in prices is due to the increase in production costs, including the increase in coal import costs, following the flotation decision, which led to the price of a tonne of coal to reach $1,800 compared to $800 before flotation, he said.
Finally, he concluded that the decision to build the Beni Suef cement complex was not based on precise information. The production and consumption of cement in the local market, before the construction of the Beni Suef cement complex was capable of producing up to 80m tonnes, without the addition of new investments, thus this complex harmed local production.