The Egyptian government has proposed that cement makers cut production by a baseline of 10 percent to shore up finances ravaged by an expanding market glut.
Egyptian cement capacity has risen to an annual 85 million to 87 million tons in the last three years following the inauguration of the 13 million ton-per-annum Beni Seuf plant owned by the military, even as sales fell to less than half that level.
Representatives of some cement companies have expressed doubts about the validity of the formula proposed in April 2021. Under this formula, each cement maker would cut production by a base amount of 10.52 percent. A number of production lines and a number of years they have been in operation are taken into account also. It is unclear if the beginning of operation would be based on the age of the plant, the date it was privatised or when current investors took over. Cement makers have asked the government for clarifications and were waiting to hear back.
Several international firms established a footing of the Egyptian cement sector. Foreign cement firms, including Germany’s HeidelbergCement , France’s Vicat, Switzerland’s LafargeHolcim , Greece’s Titan Cement and Mexico’s CEMEX , invested heavily in Egypt after a privatization drive that began in the 1990s. Local players set up their own plants later.
Another 2-million-ton plant will come on stream this year in Sohag, 400 km south of Cairo, its CEO and member of parliament Ahmed Abu Hashima. The plant, owned by Egyptian Cement Co., began trial production over the last few weeks and is due to start shipping soon.
Cement companies complained of overproduction even before the Beni Suef plant was built.
Annual cement sales fell to 41.7 million tons in 2020 from 43.8 million tons in 2019, according to central bank statistics. It stood at 49.5 million tons in 2017, the last year before Beni Suef went online. Sales last year were hurt by the coronavirus pandemic.
