ASEC Cement CEO Giorgio Bodo has cited security, fuel scarcity and general instability as the challenges facing cement producers in Egypt.
The comments came with the announcement that ASEC Minya had started clinker production at its 2Mt/yr Minya plant. In the news report ASEC congratulated itself on reaching clinker production within 28 months. Construction originally began in December 2010, just before the Egyptian Revolution of early 2011 occurred.
Bodo's comments will come as no surprise to delegates of the recent Global CemTrader conference which took place on 23 – 24 May 2013 in London, UK. In his presentation on current political unrest in the Arab countries and the implications for the cement industry, Bodo outlined seismic changes to the Egyptian cement market. As per his comments with the Minya announcement, challenges included the loss of fuel subsidies, fuel shortages, oversupply of cement and a decline in export prices. However, the overall picture was a mixed one. Bodo expected growth to be driven by growing political stability, increased government and private-sector spending, new development projects coming on-line, new export opportunities and other reasons.
Meanwhile, battles over the energy costs and supply in Egypt became public this week when Jose Maria Magrina, the CEO of Arabian Cement Company (ACC) implored the government to help cement producers move away from using natural gas, by removing operating licenses and speeding up the granting of environmental permits. Around the same time a member of the Federation of Egyptian Industries revealed that the government plans to increase the price of natural gas by over 75% for cement producers by 2016. Eventually the cement industry will be expected to source its energy needs independently.
Misr Cement announced in May 2013 that it too was preparing to use coal following a 14-hour shutdown of its kilns due to a shortage of mazot (heavy duty fuel oil). Figures with the ACC release stated that energy shortages have caused the cement industry in Egypt an effective loss of 20% (3.7Mt) of its production capacity since February 2013, with a 25% loss for ACC (350,000t). Suez Cement has also confirmed that it too has cut production by 20 - 30% so far in 2013. ¬
Unsurprisingly in this situation the alternative fuels sector has shown considerable interest in Egypt as Dirk Lechtenberg, MVW Lechtenberg & Partner, reports in the June 2013 issue of Global Cement Magazine [LINK]. Agricultural waste such as rice straw has shown potential as an alternative fuel for cement kilns. Refuse-derived fuels present a harder challenge given competition from the informal economy scavenging through rubbish tips.
Despite the many problems facing local cement producers, Egypt's compound annual growth rate in expected to be 3% for the next five years. In addition it was recently announced by the Minister of investments that Brazilian investors intend to invest US$2bn into the local cement sector.
