Displaying items by tag: Egypt
Update on Egypt, April 2022
13 April 2022Vicat’s plans to buy another 42% stake in Sinai Cement became public this week. Once completed, the France-based company should own 98% of the Egyptian company, based on previously published ownership figures. The announcement heralds a rapprochement in the relationship between the cement producer and the Egyptian government.
Last year Vicat raised a case against the government with the International Centre for Settlement of Investment Disputes (ICSID) over an argument about how it could invest in Sinai Cement as a foreign company. All seems forgiven and forgotten now with a settlement agreement signed in March 2022 between Rania el Mashat, the Minister of International Cooperation on behalf of the Egyptian government, and Guy Sidos, the chairman and chief executive officer of Vicat Group. Local press reported that the government is trying to attract more direct foreign investment. Sinai Cement reported a loss attributable to its parent company of around US$19.1m in 2021, down from a loss of US$30.3m in 2020. However, its sales rose by 63% year-on-year to US$78m.
Sinai Cement has some specific operating issues related to its geographic position in the Sinai Peninsula and ongoing security concerns. Yet its mixed fortunes also sum up some of the continuing challenges the Egyptian cement industry is facing. After years of overcapacity, the government introduced reduced cement production quotas in July 2021 and this is mostly perceived to have improved prices in the second half of the year. Vicat described the arrangement as having capped the local market at 65% of its production capacity and it said that prices recovered ‘significantly’ as a result in the second half of 2021. Cemex’s regional chief Carlos Gonzalez told local press that the move had given plants “A glimmer of hope for the return of balance to the cement market.” The company has also announced a US$20m local investment backing up this view. Not all the foreign multinational companies entirely agreed, with HeidelbergCement reporting a ‘sharp’ decline in sales volumes although chief executive officer Dominik von Achten did describe the country as ‘coming back’ in an earnings call about his company’s financial results in 2021. Solomon Baumgartner Aviles, the chief executive officer of Lafarge Egypt, was also cooler about the production cap in a press interview in October 2021, describing it as too early to assess how well the cap was working and noting that the gap between supply and demand was still large.
Vicat said in its annual report for 2021 that, “Provided no further adverse geopolitical, health or security developments occur, the current climate is unlikely to jeopardise the prospects of an improvement in the subsidiary’s profitability, which should begin to gradually occur.” The geopolitical bit was timely given that Russia’s war in Ukraine started on 24 February 2022. It also targets the latest problem hitting Egyptian cement producers: energy costs. The head of Arabian Cement told Enterprise Press that initially some producers had opted to temporarily stop production and use stocks instead to attempt to try and wait until the energy price volatility ended. However, it stayed high so the cost of cement has gone up generally. Producers are now trying to switch to using a high ratio of natural gas, such as 10%, but this is dependent on the government letting them.
The Egyptian government, for its part, is facing a decision whether to supply subsidised gas for domestic industry or to export to Europe. The backstory here is that Egyptian cement producers are facing yet another step change in fuel supply. In the mid-2010s lots of plants switched from heavy fuel oil and gas to coal. High international coal prices could be heralding another change.
Alongside this the value of Egypt’s cement exports rose by 151% year-on-year to US$456m in 2021 from US$182m in 2020. The Cement Division of the Federation of Egyptian Industries has attributed this to growth mainly on the African market. This trend continued in January and February 2022 with cement exports up by 141% year-on-year to US$104m from US$43m. The main destinations were Ghana, Cameroon, Ivory Coast and Libya.
HeidelbergCement summed up the current state of the Egyptian cement market in its 2021 annual report as follows “The development of the Egyptian cement market continues to be determined by government intervention.” What happens next is very much in the hands of the state as it decides whether to extend the production cap, which fuels to subsidise, whether to allow exports and where to invest in infrastructure projects. One variation on this theme may be local decarbonisation targets. At the end of March 2022 the Global Cement and Concrete Association (GCCA) launched a series of Net Zero Accelerator initiatives, including one in Egypt. How a country that produces more cement than it needs reduces its CO2 emissions presents another challenge for manufacturers and the government to grapple with.
Vicat to buy additional 42% stake in Sinai Cement
11 April 2022France/Egypt: France-based Vicat has issued a mandatory tender offer to buy an additional 42% stake in Sinai Cement. The proposal follows a final settlement agreement signed between Vicat and the Egyptian government in late March 2021, according to the Daily News Egypt newspaper. Following the completion of the transaction Vicat should own a 98% in the Egypt-based cement producer based on its reported ownership at the end of 2021.
In 2021 Vicat raised a case against the Egyptian government with the International Centre for Settlement of Investment Disputes. Media reports at the time alleged that the cement producer was being forced to reduce its shares in its subsidiary Sinai Cement due to a law stopping foreign ownership of companies operating in the Sinai Peninsula on the basis of security grounds. Around the same time Vicat also announced publicly that it was keen to continue operating in the country.
Sinai Cement increases sales in 2021
05 April 2022Egypt: Sinai Cement’s consolidated sales were US$78.9m in 2021, up by 62% year-on-year from US$48.7m in 2020. The company recorded a loss of US$19.4m, down by 37% year-on-year from US$30.7m in 2020.
Mohamed Hegazy appointed as head of Suez Cement
30 March 2022Egypt: Suez Cement has appointed Mohamed Hegazy as its chief executive officer (CEO). He succeeds Jose Maria Magrina, who has held the post for six years. Magrina will start a new position as the CEO of HeidelbergCement Trading.
Hegazy is currently the commercial director of Suez Cement. He started his career with HeidelbergCement Group in 2007 as a sales representative for Suez Cement. He took over managerial roles in the sales and marketing departments, before being nominated as commercial director in 2017.
World: The Global Cement and Concrete Association (GCCA) has launched new Net Zero Accelerator initiatives under its 2050 Net Zero Global Industry Roadmap strategy in several countries. The new initiatives will identify barriers to decarbonisation and recommend key actions in Colombia, Egypt, India and Thailand. The association will set out national roadmaps with reduction levers, identify funding possibilities and enter into policy dialogues with national governments. Together, the four countries account for 10% of global cement production.
Chief executive officer Thomas Guillot said "Last year, our industry made a breakthrough net zero global commitment. This is the next logical step as we move our focus from a global roadmap to driving decisive local action." He continued "Global cooperation between governments and industry is crucial to ensuring net zero targets are met. Our Net Zero Accelerators will offer collaboration and support to a number of target countries to help them decarbonise and align with the global roadmap. I'm proud to launch the first phase of the Accelerator programme to assist these nations in embracing greener technologies and work towards a more sustainable future together. I now call on more partners around the world to join us and be part of this movement."
Misr Cement Qena boosts profit and sales in 2021
09 March 2022Egypt: Misr Cement Qena recorded a consolidated net profit of US$11.1m in 2021, more than seven times its 2020 net profit of US$1.46m. Its net sales were US$160m, up by 0.4% from slightly below US$160m.
Switzerland: Holcim has appointed Toufic Tabbara as Region Head North America and a member of the group executive committee. He succeeds René Thibault, who has decided to leave the company.
Tabbara was most recently working as the chief executive officer for US Cement. He joined the group in 1998 as Director Strategy & Development in the US and has led Holcim’s ready-mix concrete, aggregates and cement businesses in the US, Canada, Egypt, Jordan, Lebanon and Algeria.
He holds a Master of Business Administration from the Thunderbird School of Global Management in Arizona, US and a Bachelor of Business Administration from the American University of Beirut in Lebanon.
Egyptian cement exports surge by 151% in 2021
02 March 2022Egypt: A report from the Export Council for Building Materials, Refractory and Metallurgy Industries (ECBM) has revealed that Egyptian cement exports rose by 151% year-on-year in 2021. The value of cement exports was US$456m in 2021 compared to US$182m in 2020, according to the Al Mal News newspaper. Local producers have focused exports on African markets.
Vicat fights inflation with price rises in 2021
16 February 2022France: Vicat says it offset rising energy costs by raising its prices in 2021. It reported growth in most places as markets recovered from the start of the Covid-19 pandemic in 2020. It also noted a particular improvement in Egypt as government-mandated changes came into force in July 2021. The group’s consolidated sales rose by 11.3% year-on-year to Euro3.12bn in 2021 from Euro2.81bn in 2020. Cement and concrete volumes increased by 12.4% to 28.1Mt and 12.5% to 10.5Mm3 respectively. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 11.1% to Euro619m from Euro557m.
“Conditions in our markets remained dynamic, supported by favourable pricing trends in a context of sustained demand. This offsets the sharp rise in energy costs and wage increases,” said Vicat group chairman Guy Sidos.
Orascom acquires Orascom Trading
26 January 2022UAE/Egypt: Orascom Construction, a UAE-based engineering and construction contractor, has acquired Orascom Trading, an Egypt based provider of heavy machinery equipment, including equipment for the global cement sector.