EGYPT: IDA proposes 12 cement licences in Upper Egypt this year

The Industrial Developmental Authority (IDA) is set to propose 12 new cement licences in several Upper Egypt governorates this year.

The IDA is also working on preparing new mechanisms and regulations for proposing cement licences, before submitting them to Prime Minister Ibrahim Mehleb within 10 days. Mehleb will approve them as soon as possible, said Ismail Gaber, Chairman of IDA, on the sidelines of the Economic Summit in Sharm El Sheikh.

The new mechanism includes determining the areas and places suitable for the cement industry, as well noting the environmental loads and their geographical distribution. The new mechanisms also include qualifying the companies willing to technically and environmentally acquire licences, and obliging investors to provide energy, whether gas or coal, according to Gaber.

The authority is preparing to propose the first batch of licences, to avoid the expected gap between production and consumption by 2020, said Gaber.

The production capacity of the current 22 cement factories is estimated at around 50m tonnes, while the expected consumption by 2020 is 80m tonnes, according to Ministry of Investment data.

Gaber added: “We have an expected gap after five years, amounting to 30m tonnes. We should begin proposals this year in order to avoid this, especially as it takes two or three years for cement factories to begin operations.”

“The first licences to be issued raise the production capacity of factories by 21m tons in 2018 and with the rest of the instalments, the gap will not appear,” he said. “Most of the new licences will go to the governorates of Minya, Sohag and Qena, Beni Suef and New Valley, and we will exclude Cairo, Alexandria and the Delta governorates in observance of environmental loads.”

Gaber also said: “The northern region is environmentally saturated, and I cannot issue new licences in it. The mechanisms and controls we put [in place] take into consideration factory distribution among all governorates of the state to reduce environmental damage.”

The licences are given to all factories; whether they are new or existing factories wishing to expand in Upper Egypt. The licences are not limited to adding production lines to existent factories.

Meanwhile, Arabian Cement Company (ACC) CEO Jose Maria Magrina said the Egyptian market does not need cement licences in the next five years. He said the existing factories are capable of meeting the market needs once they work in full capacity.

“The existing factories work with no more than 70% of their capacity as a result of weak gas supply, and produce more than 50m tonnes, and once they fully operate on coal, the gap will disappear,” he concluded.