EGYPT: Arabian Cement Negotiates with Egypt to Amicably Settle Pending International Arbitration

Arabian Cement Company (ACC) announced that its main shareholder, the Spanish investor Aridos Jativa/Cementos La Union, has started negotiations with the Egyptian Committee of Dispute Resolution headed by Eng. Ibrahim Mahlab, Egyptian Prime Minister.

The current negotiations are overseen by Committee member, Dr. Nagla’a AL Ahwany, Egyptian Minister of International Cooperation, and are aimed towards finding an amicable settlement of the World Bank arbitration that the Spanish investor filed against the Government of Egypt in 2013 regarding, among other things, the changes in the procedures to obtain operations licenses that were applied to ACC retroactively.

About Arabian Cement Company

Arabian Cement Company (ACC) was first established in 1997 by a group of Egyptian entrepreneurs, who aspired to establish a leading Egyptian cement company. The cement factory is located in the Suez Governorate. It produces five million tons of first quality cement, approximately 10% of Egypt’s production. The company is a joint venture between Cementos La Union, a Spanish investor holding the majority of shares, and a group of Egyptian investors.

Its brand “Al Mussallah” enjoys undisputed prestige and is considered among the best cements produced in Egypt.

EGYPT: Suez Cement net profit down 61.8% YOY in 1H of 2015

Suez Cement’s net profit registered EGP 118.9m in the first half (1H) of 2015, compared to EGP 311.9m in the same period of 2014, the company announced, referring to its consolidated financial statement.

On a quarterly basis, net profit for the second quarter (Q2) marked EGP 60.9m, down from EGP 142.5m in Q2 of 2014, the company said.

Suez Cement is seeking to increase its energy intake and its production capacity by 15%, according to Bruno Carrè, the company’s Managing Director in Egypt, during the Milan Expo 2015. He added that the company will not file a request to obtain a new cement licence.

Carrè also announced in March that the company will convert two new facilities to coal in 2015, adding to two facilities that were converted in 2014.

“We are investing some EGP 400m per year for four years,” Carrè said. “We have done one and we converted two plants and we have another two plants to complete.”

Carrè had previously stated that he expected Suez Cement’s revenues to keep growing in 2015 at a rate of 10% to 15%.

On 26 March, the company donated EGP 30m to the Long Live Egypt fund. A cheque worth EGP 10m was given to Prime Minister Ibrahim Mehleb. The remaining EGP 20m will be given over the next two years, with EGP 10m each year.

Following the government’s approval in April last year to use coal as a source of energy in the industrial sector, cement companies in Egypt took steps to commence testing coal in thermal power generation.

Last May, cement factories faced difficulties as they said the specifications set by the Ministry of Environment on trade, transport, coal storage, and the energy mix, are stricter than European specifications.

EGYPT: Arabian Cement completes latest addition to alternative fuel processing

Egypt’s third biggest cement producer, Arabian Cement Company (ACC), has completed its latest addition to the alternative fuel processing machinery at its plant in the Suez governorate, the company announced Sunday.

The added equipment, called “Hot Disc”, allows ACC’s plant to rely completely on coal and alternative fuel to run its operations, the company noted in the statement.

ACC currently has a designed fuel mix of 70% coal and 30% alternative fuels. The alternative fuel that will be used will be a mixture of agricultural wastes, municipal sludge, and RDF. Use of alternative fuel is expected to result in reducing emissions by approximately 60,000 tonnes of carbon dioxide per year on average.

Arabian Cement has sought to utilise alternative energy to increase its capacity to 100%. The company is currently running at approximately 80% of its capacity, while around 70% of the energy it uses is coal-based. In the meantime, 10% of its energy is reliant on alternative energy, such as waste and biomass.

Last year, Arabian Cement held the first initial public offering (IPO) after the 25 January Revolution in 2011, with the company aiming to raise $100m by listing on the Egyptian Stock Exchange.

Following the government’s approval in April last year to use coal as a source of energy in the industrial sector, Arabian Cement took steps to commence testing coal in thermal power generation.

Arabian Cement recorded an 11% increase in revenues of EGP 585m during the first quarter of 2015, compared to the same quarter last year. This, however, this did not lessen the significant drop in the company’s net profits, which plummeted by 52% to reach EGP 56m.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) totalled EGP 184m, 19% lower than the EGP 227m recorded during the corresponding quarter last year.

EGYPT: Suez Cement seeks to increase production capacity by 15%

Suez Cement will seek to increase its energy intake and its production capacity by 15%, Bruno Carrè, the company’s Managing Director in Egypt, said during the Milan Expo 2015.

Carrè added the company will not file a request to obtain a new cement licence, however.

The company has used EGP 300,000 to promote its section at the expo using the new cements products the mother company produced.

In March, Carrè told Daily News Egypt the cement company will convert two new facilities to coal in 2015, adding to two facilities converted in 2014.

“We are investing some EGP 400m per year for four years,” Carrè said. “We have done one and we converted two plants and we have another two plants to complete.”

At the Economic Summit that same month, Carlo Pesenti, the CEO of Suez Cement’s mother company Italcementi, said the company is currently focusing on energy source diversification at its Egyptian facilities.

On whether or not the company will pump new investments into Egypt, Pesenti said the company “has capacity [to increase the volume of investments]”.

Regarding its current Egyptian investments, Pesenti said the “company is investing some €150m to build a wind farm that will be deployed in the next 24 months”.

On 26 March, the company donated EGP 30m to the Long Live Egypt fund. A check worth EGP 10m was given to Prime Minister Ibrahim Mehleb. The remaining EGP 20m will be given over the next two years, with EGP 10m each year.

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.

EGYPT: Arabian Cement to use alternative energy in capacity increase

Arabian Cement is seeking to utilise alternative energy to increase its capacity to 100%, the company’s CEO Jose Maria Magrina told Daily News Egypt on the sidelines of the Economic Summit.

The company is currently running at approximately 80% of its capacity, with around 70% of the energy it uses is coal. In the meantime, 10% of its energy is reliant on alternative energy such as waste and biomass.

Arabian Cement is currently working on the completion of another installation that would allow utilisation of waste for the production capacity can reach 100%. The conversion will be completed within one month.

“We could increase production the moment we finish our complete conversion to alternative fuels,” Magrina said.

The company is seeking to increase its revenues by 10% this year, compared to the preceding one.

Magrina said the company is always looking for new investments, adding that it is expanding on concrete because the new city will need enormous amounts of concrete.

“In terms of capacity, we are not going to invest more,” he said.

The company was discussing the possibility of financing a facility it has in Brazil from Egyptian banks’ loans, but this has been shelved.

“We decided, because it is still small in comparison with our size as a company, to finance it ourselves,” Magrina said.

EGYPT: Sales improve at Suez Cement Group

Suez Cement Group of Companies (SCGC) has reported that during 2014 its sales increased 22%, while recurring EBITDA improved 8.8% compared to 2013 figures.

But, higher corporate income taxes coupled with an absence of foreign exchange gains were responsible for an 8.4% drop in net profit after non-controlling interest.

The EBITDA gains were also driven by the company's downstream activities in transportation and ready mix cements as well as SCGC's paper bags subsidiary, which saw an EBITA increase of 26.5%. Cement activities accounted for a gain of 6.3%.

The strong revenue performance was largely due to cement price increases due to an unprecedented surge in production costs and product shortages. Overall, clinker production decreased as a result of severe energy supply issues that impacted each of SCGC's plants and subsidiaries differently. The Tourah operation felt the greatest pressure from expensive clincker imports that were necessary to satisfy Egypt's growing demand.

ITALY: Cementir, Caltagirone jr: "Il calo del cemento si sta arrestando. Problemi in Egitto"

Secondo il presidente della compagnia Francesco Caltagirone jr negli ultimi mesi il declino del consumo di cemento in Italia si sta arrestando, anche se ci vorrà tempo per tornare ai livelli pre-crisi - Problemi legati al terrorismo in Egitto.

Il calo di consumo di cemento in Italia "si sta arrestando". A dirlo è il presidente di Cementir Francesco Caltagirone jr, parlando nel corso dell'assemblea straordinaria del gruppo sulla delega per un aumento di capitale da 300 milioni: "Non so se una rondine faccia primavera, ma da dicembre, gennaio e anche febbraio, il declino sembra si stia arrestando". 

In ogni caso, ha proseguito Caltagirone jr, nonostante i cenni di ripresa, per tornare ai volumi pre crisi il mercato italiano del cemento impiegherà almeno altri due anni.

Sulla produzione di Cementir Holding, poi, pesano i problemi legati al terrorismo medio-orientale. Nell'impianto in Sinai, ha spiegato il pesidente della societò, "area con problemi di terrorismo, siamo vicini alla striscia di Gaza, c'e' ancora uno stop and go della produzione, ma speriamo la situazione possa stabilizzarsi". "L'impianto - ha aggiunto Caltagirone Jr - da tre anni va alla metà della produzione; dalle 16 nell'area scatta il coprifuoco".

EGYPT: Government studies allow new cement factories to be established: Prime Minister

During its meeting held Monday, a government Economic Group recommended that the possibility of allowing new cement factories to be constructed be studied, with investors providing the facilities’ energy requirements.

A proposal to provide facilities for building the factories is currently being considered, according to Prime Minister Ibrahim Mehleb.

Cabinet Spokesman Hossam Al-Qawesh said that the economic group meeting concluded that there was an urgent need to expand cement production and increase production capacity to meet future needs.

Egypt has suffered from an energy crisis since 2011, which has put a brake on the local and global financial and business communities’ efforts to expand on the Egyptian market.

Al-Qawesh confirmed the government is taking steps and completing programmes to fulfil power needs in the near future. This covers supplying power stations with their fuel needs and providing the funding necessary to implement emergency plans.

Al-Qawesh said that Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour recently visited China. Abdel Nour found there is a strong will within China to sign a number of agreements with Egypt in the fields of business, civil aviation, and infrastructure projects for roads, transportation, and electricity. China is currently participating in the implementation of the high-speed electrical train project in Egypt.

He went on to say that the Prime Minister requested a meeting be held with the Ministers of Industry and Petroleum and direct-reduced iron (DRI) producers in Egypt to study modifying the price of natural gas for the industry. Natural gas represents a key element of chemical reactions necessary to produce DRI or “sponge iron” and does not just serve as an energy source for the process. The study must be thorough, Mehleb said, and take production costs into account for those factories.

The meeting also included a discussion of decreasing global oil and gas prices and their anticipated impact on the Egyptian economy, as well as the positive and negative aspects of these decisions. Those present also touched on taking steps to maximise the positive aspects of the phenomenon and working to decrease the negatives.

According to the press release, Petroleum Minister Sherif Ismail said during the meeting that debt owed to foreign partners has been reduced and agreements are underway to pay a portion of remaining dues in dollars and another portion in Egyptian pounds.

Mehleb stressed the need to take the measures necessary to increase the efficiency of the Holding Co. for Water & Wastewater and pay attention to maintaining water and sanitation networks as well as treatment plants. Mehleb also said that a study should be undertaken on a draft resolution to return the company’s assets in new cities to the executive bodies that manage the cities.

EGYPT: Cement firms overcome gas shortages by importing coal.

Several of Egypt's major cement producers have begun retrofitting their plants to run on energy from imported coal, beating high gas prices and energy shortages that have curbed industrial output this year.

Egypt has been suffering from an energy crisis in recent years as supply from state-owned Egyptian Natural Gas Holding Company (EGAS) has been intermittent and power blackouts commonplace.

The government has targeted energy-intensive cement companies for cutoffs while its priority has been to preserve gas for power generation, which would avoid blackouts and public unrest.

Cement companies began petitioning for permission to use coal instead, and the cabinet approved the industrial use of coal in April. Companies still must petition for individual licences to burn and import coal.

Some have already retro-fitted their plants to run on coal.

"Most of Egypt's cement producers have been working towards fuel switching because of unreliable gas supply and high prices. Some have already started importing coal," said Jens Zimmerman, an energy markets analyst for Wood Mackenzie.

Permits are required particularly those for plants located near Cairo and other urban areas. Environmentalists say extensive use of coal as energy would be catastrophic for Egypt, which already has high air pollution levels.

Arabian Cement has already started a gradual switch to coal and has imported 700,000 tonnes so far this year, mostly from South Africa, Ukraine and Spain, Investor Relations Manager Haitham El Shaarawy said. It expects to bring in another 200,000 tonnes by the end of 2014, he added.

He said the decision had been largely a financial one, with coal prices around 30 percent cheaper than gas prices.

Gas shortages in April, May and June also had cut Arabian Cement's first-half clinker production, a first step in producing cement, by almost 20 percent compared with the previous year.

Lafarge Cement Egypt, which has one cement plant in Egypt, has already converted it to coal and has applied for a permit to import coal, a spokeswoman said.

Suez Cement, which has five cement factories, began testing coal use at its Kattameya plant in September and will begin testing at its Suez plant by year-end, the company said in its quarterly earnings statement last week.

Zena Spinelli, a communications manager for Suez, added that factories near population centres will have to undergo more rigorous evaluations before the Egyptian Environment Ministry clears them for licenses to use coal.

The Kattameya plant is located in the suburbs of Cairo.

Earlier this year, an Egyptian minister said government estimates had found that burning coal in cement plants alone would save 450 million cubic feet of gas per day.

Coal is attractive because global prices are hovering around five-year lows. Output is rising from countries including Australia, Indonesia and the United States, while demand growth has been slowing due to sluggish economies and environmental concerns.

Coal traders have noted the emergence of Egypt as a market, but demand from its cement companies alone is too small to reduce much of the world's surplus and affect prices, Wood Mackenzie's Zimmerman said.

"(Egypt's) Demand for coal will be small to start with but could rise significantly once power producers start using it," he said.

Egypt's cabinet said on Sunday that 38 local and international companies had recently applied to build power plants using coal or renewable energy.

BRAZIL: Arabian Cement contributes €7m to facility in Brazil

Egypt’s third biggest cement producer, Arabian Cement Company, announced Tuesday it will establish a cement grinding facility in Northwest Brazil.

The move comes as a part of the company’s joint venture agreement with Brazil’s leading cement manufacturer Cementos Relampago, part of Cementos La Union, Reuters reported.

The facility will run with a capacity of 230,000 tons per year, with a total cost of €23m ($28.7m), of which Arabian Cement will contribute €7m to the project.

Arabian Cement added that its contribution represents 60% of the total paid in capital, noting that 50% of the project’s cost will be financed through debt and equity.

In May, Arabian Cement held the first initial public offering (IPO) after the 25 January Revolution in 2011, with the company aiming to raise $100m by listing on the Egyptian Stock Exchange.

Following the government’s approval in April to use coal as a source of energy in the industrial sector, Arabian Cement has taken steps commencing testing coal in thermal power generation. The company aims to shift to this energy source for 50% of its factories’ needs.

EGYPT: Armed forces constructing new cement production line

The armed forces’ Al-Arish cement factory is constructing a new cement production line to be completed by the end of 2015, head of the construction materials department at the Cairo Chamber of Commerce Ahmed El-Zeiny said on Tuesday.

“This is an attempt to fight the monopoly imposed by foreign cement facilities that sell cement at higher prices than the international standards,” El-Zeiny said. “Cement companies sell the tonne of cement for some EGP 450, $40 higher than the international price”.

The price for a tonne of cement produced by Al-Arish Cement factory is sold for EGP 550, El-Zeiny noted.

After its completion, the production line will help bring the quantity of cement produced to 7m tonnes per year from 3.5m tonnes per year.

“In two years, the facility has registered over EGP 1bn in revenues,” El-Zeiny added, explaining that the factory’s production is planned six months in advance.

El-Zeiny stated that constructing the production line will probably cost between EGP 700m and EGP 800m.

El-Zeiny said that cement prices have increased by 50% during the past three years. He stated that this led to a 10% to 20% increase in the prices of properties.

EGYPT: Suez Cement to invest in a renewable energy project

Suez Cement, Egyptian subsidiary company of Italcementi Group is investing in a joint project with Italgen to construct a wind farm, Omar Mohana, CEO of the company told Ahram Online on the margins of the Euromoney conference.

The first phase aims to produce 120 megawatts before the end of 2015 with about LE1.4 billion ($200 million) worth of investment.

Two other phases with a similar production capacity will follow.

Mohana says that his company is producing hardly above 50 percent of its capacity due to an energy and fuel shortage, hence its desire to invest in wind energy.

"The production will be transferred to the national electricity grid as any other electricity generated and we will get our needs from the grid," he said.

Mohana is mainly worried about pricing as wind energy is more costly than energy generated from traditional fuel.

"The government proposed LE0.85 per kilowatt, which is a good price but we heard that they want to limit the production capacity of a wind farm to 50 megawatts, I hope this is not going to happen as it will be cost ineffective,"' he added.

The electricity ministry pays an average price of LE0.47 to produce one kilowatt of energy per hour, while the average selling price registers LE0.22, Mohamed El-Yamany, the ministry's spokesperson, told Ahram online in July.

To solve the energy shortage problem, Suez Cement is opting for an energy mix that will also include carbon. Before the end of the month, the company will operate its Qatameya cement factory with carbon. By the end of November the Suez plant will follow.

To defend the choice of environmentally unfriendly carbon as a replacement of the rare natural gas, Mohana underlined that Egypt is the only country worldwide not to use charcoal in cement production.

"Up to 80 percent of European production of cement and 60 percent in the USA is generated by carbon," he said.

Suez Cement market owns 18 percent of the market share with a total production capacity of 11 million tonnes per year.

In a session dedicated to energy during the conference connecting high executives to officials, Giuseppe de Beni, managing director of Italgen said that Egypt needs to work faster to solve its energy problem.

"We started at the same time to work on wind energy in Italy, Morocco and Egypt. Production started three years ago in the other countries while it will start in Egypt this year, we need a different speed,"' he said.

Mohamed El-Mahdi, chief executive officer of Siemens Egypt said that Egypt needs to address demand as well as supply side of its energy.

"It is not normal is to have an economy growing by 2 percent and energy demand growing by six or seven percent,"' he said.

He advocated for a modification of building and manufacturing codes as well as the replacement of electric water heaters with solar heaters.

EGYPT: Gas prices increase to $8 per million BTUs for cement industry

The government has raised gas prices for cement factories to $8 per million British Thermal Units (BTUs) compared to $6 previously, while fuel oil increased from EGP 1,500 to EGP 2,250 per tonne.

An official source from a cement company who requested anonymity anticipated cement prices to increase in the coming days due to higher production costs.

“Energy represents 60% of cement production costs and any increase in energy prices have a direct influence on final prices,” said the source, “We do not yet know the impact of increased energy prices on consumers as cement prices are also affected by supply and demand.”

“Gas is generally not available and we are experiencing a large and persistent deficit in its supply which has reduced our production capabilities,” he said.

He added that the problem faced by cement factories is not so much the price as its availability.

A number of cement companies operating in Egypt are looking to use coal as an alternative source of energy this year.

The source ruled out these companies’ resorting to importing gas at this time due to high prices for the process, valuing up to $ 14m BTUs.

EGYPT: cement producers face energy cuts

Muted levels of construction activity since the 2011 revolution, combined with constraints on electricity supply, has stifled operating conditions for Egypt’s cement producers, though new projects scheduled to launch in the second half of 2014 could provide a helpful boost to the segment, recently buoyed by the successful IPO of Arabian Cement.

The IPO, the first in Egypt for four years, of the local cement producer was 18.5 times oversubscribed after 85m shares were sold worth $110m. This emphasised the performance of the country’s capital markets in recent months, with the main index rising by more than 70% over the past year.

The large subscription for shares in Arabian Cement, in which Spanish firm Cementos La Union holds the largest stake, not only reflects the latent demand for new Egyptian stock offerings, but may also herald a much-needed turnaround in fortunes for the broader building materials sector. 

Navigating challenges

Output in the building materials industry has been impacted by the turbulence with public spending on construction and infrastructure activity declining. The value of investments in the sector fell by 71% in 2012 according to data by the Central Bank, cited in a report by Bank Audi from March this year.

Private investments in new residential and commercial property development have also dwindled, albeit to a lesser extent. Rents for the best Cairo offices fell to $40 per square metre per month in 2013 from $50 since 2009 while retail rents have plunged to $100 per square metre per month from $150, according to data from real estate consultant Knight Frank.

But things are starting to improve. Construction and building activity grew by 6% in 2013 with construction expenditure standing at $6.2bn according to the Bank Audi report. It is expected to rise to $7.3bn in 2015.

In a bid to revive the flagging economy, the interim government has pledged to pump money into construction, particularly targeting mothballed infrastructure projects and low-cost housing, as part of a $4.3bn stimulus package. With a focus on job-creation through the activation of projects in the public sector, the government is also hoping to spur growth in the private sector. 

Gas flow

But another problem remains. Inadequate supplies of natural gas are impacting the ability of producers to maintain output. Balancing rising domestic consumption with export commitments has been a challenge for Egypt’s gas sector in recent years and in May, a number of cement firms were forced to stop production after the Egyptian Natural Gas Holding Company (EGAS) halted the flow of gas to 10 plants, which account for more than two-thirds of the industry’s output, to ensure sufficient supply elsewhere on the grid.

Supplies to the sector, which obtains gas from state-owned EGAS at a subsidised rate, had already been scaled back by 35% at the start of 2014 as the government sought to balance industrial needs and power stations’ gas requirements, while also moving to increase prices nearer market rates. 

Sector canvassing fuelling options, weighing costs

However, there may be a silver lining as the restricted supply is encouraging producers to diversify their energy sources to keep their kilns operating.

One of these alternatives will be coal, with the government easing restrictions on imports of the fuel in April. There have been objections to the plan to import coal although the government has said the ongoing outages in power supplies to the public warrant both cutting gas flows to industry and allowing coal to be used for industrial purposes and to generate power.

Suez Cement announced at the end of April that it would be shifting to a fuel mix comprising 80% coal and 20% waste material. Another firm, Misr Beni Suef Cement Company, has announced it will be using diesel to keep at least one of its production lines operating, after being informed by the state that gas supplies would be suspended throughout May.

Bruno Carre, Suez’s managing director, agrees that all Egyptians, citizens and companies must help reduce their energy consumption but the process will take time. “Companies, like cement producers, must also diversify their energy mix as was recently approved by the Cabinet. But this will take some time to implement during which cement production will continue to be constrained and costly imported cement products will be necessary,” he told OBG.

EGYPT: Le cartel du ciment en pleine offensive

Les cimenteries cher­chent par tous les moyens à accélérer l’importation du char­bon. Après avoir augmenté le prix de la tonne, les usines font désormais appel à la justice contre le gouvernement qui a diminué les subventions au gaz naturel qu’elles utilisent.

Le cartel des usines de ciment justifie sa hausse des prix par le manque d’énergie. Faute d’éner­gie suffisante, les producteurs ont dû réduire les quantités offertes sur le marché. Conséquence: les prix ont flam­bé la semaine dernière pour dépasser les 900 L.E., contre seulement 500 L.E. le mois der­nier.

Pour ces usines, les prix ne baisseront pas prochainement. « La hausse du prix de la tonne de ciment est le résultat des tur­bulences qu’affrontent ces entreprises. Le manque de gaz s’aggrave avec l’approche de l’été. Le charbon ajustera l’équation », espère Médhat Stephanos, président de la Chambre du ciment auprès de l’Union des industries.

Il ajoute: « Les cimenteries travaillent à moins de la moitié de leur capacité. Une fois la crise de l’énergie réglée, l’offre pourra à nouveau satisfaire la demande et les prix reviendront à leur niveau normal ».

Les cimenteries, comme toutes les usines fortement consomma­trices d’énergie, font face depuis deux ans à un manque de gaz naturel. Le gouvernement consacre la plus grande partie du gaz naturel disponible à la pro­duction de l’électricité. Cette der­nière absorbe, à elle seule, environ 60 % du total du gaz naturel en Egypte, pour une moyenne totale de 75 millions de m3 par jour, selon les chiffres du ministère du Pétrole.

Recours à la justice

Les cimenteries font aussi pres­sion sur le gouvernement en ayant recours à la justice. L’entreprise française Lafarge, un des plus grands producteurs de ciment en Egypte, a intenté il y a deux semaines un procès contre le gou­vernement égyptien. Un respon­sable de cette entreprise explique : « Notre contrat avec le gouverne­ment implique un prix fixe de 4 dollars l’unité de gaz. Nous pour­rions accepter de passer à 6 dol­lars si le gouvernement nous pro­curait tous nos besoins en gaz. Mais nous souffrons d’un manque sévère de quantités et la produc­tion a été réduite d’environ 30 % au cours des 3 derniers mois ».

Un responsable au ministère du pétrole, qui a requis l’anonymat, souligne cependant: « Nos contrats avec les usines de ciment sont ouverts. Le gouvernement a le droit de modifier le prix du gaz à n’importe quel moment, selon les fluctuations des cours mondiaux. Le procès de Lafargen’aboutira probablement pas ».

Plusieurs autres entreprises attendent l’issue du procès pour décider d’adopter ou non une démarche similaire.

Des entreprises bénéficiaires

De son côté, le gouvernement accuse les entreprises de ciment d’abuser de la crise du gaz pour obliger le gouvernement à accélé­rer les procédures d’importation du charbon. « Cela n’est pas acceptable. Le pays affronte une crise, et il est normal que toutes les parties en assument une part», lance Atef Yacoub, président de l’Organisme pour la protection du consommateur.

Pour lui, les entreprises de ciment, qui ont toutes réalisé des bénéfices en 2013, s’obsti­nent à préserver leur immense marge de profits.

Yacoub avance que le coût moyen de production d’une tonne du ciment ailleurs dans le monde ne dépasse pas les 250 L.E., soit presque quatre fois moins que le prix actuel en Egypte.

L’organisme affirme avoir déposé plainte contre les entre­prises de ciment auprès du régu­lateur contre le monopole et la protection de la concurrence.

Le charbon: industrie contre écologie

Par ailleurs, le dossier du charbon continue de provoquer des remous. Il y a quelques semaines, les cimenteries ont gagné le premier round. Le pre­mier ministre, Ibrahim Mahlab, a permis aux entreprises l’im­portation de charbon avant même que le ministère de l’En­vironnement ne précise les mesures nécessaires à adopter pour satisfaire les normes envi­ronnementales indispensables, notamment durant le transport de ce produit des ports vers les usines, et son utilisation dans les cimenteries.

Le porte-parole du ministère de l’Environnement accuse les usines d’importer du charbon avant d’avoir modifié leurs équipements antipollution. « Modifier les équipements des usines nécessite au moins 5 mois, alors que la première livraison de charbon arrivera d’ici un mois. Cela veut dire que les équipements ne seront pas ajustés pour répondre aux normes environnementales », indique-t-il.

Dettes

Par ailleurs, un responsable du ministère du Pétrole révèle que les cimenteries n’ont toujours pas payé leurs factures de gaz subven­tionné depuis juillet 2013. « Les entreprises de ciment exagèrent», dit furieusement le responsable qui a requis l’anonymat, « elles n’ont pas payé la différence de prix depuis l’augmentation de juillet ».

Les dettes de ces entreprises vis-à-vis du ministère ont atteint 1,2 milliard de dollars. Il s’agit d’un total de 15 cimenteries. La seule entreprise publique oeuvrant sur le marché, Al-Qawmiya pour le ciment, fait aussi partie de la liste. Elle doit au gouvernement 37 mil­lions de dollars.

Lafarge doit au gouvernement 164 millions de L.E., soit l’équiva­lent de la facture liée à la hausse du prix du gaz.

« Les entreprises du ciment ont choisi d’attaquer le gouvernement. Mais qu’elles payent leurs factures d’abord », se révolte cette même source.

EGYPT: Arabian Cement shares jump EGP 10.39 on first day of trading on EGX

On its first day of trading Sunday, Arabian Cement jumped from EGP 9 to EGP 10.39, with a trading volume of 17.3m shares. The total value of shares traded was $179.8m.

The company’s CEO Jose Maria Magrina said “offering shares on the Egyptian stock exchange is a positive step towards increasing the company’s capital in the future, and it is an opportunity that was not available before.”

The company is offering 40% of the company’s shares on the stock market. It is the first such offering since the 25 January Revolution in 2011.

“The offering was oversubscribed 18.5 times, as recorded purchase orders for private market transactions reached 460.5m shares, while the volume of shares being offered for sale was only 24.9m, an allocation rate of nearly 5.4%,” Magrina added.

The total demand for shares in the company through both public and private offering reached $1.5bn, despite the offering only having a total value of $110m from the sale of 85.2m shares at EGP 9 per share.

Sherif Samy, head of the Egyptian Financial Supervisory Authority (EFSA), said: “We hope that the offering will be the start of a series of offerings that will benefit all parties involved, and which will indirectly help investment funds.” He added that the demand for the stock reflects the confidence of investors, particularly foreign investors, in the Egyptian economy.

According to Magrina, the offerings will serve to strengthen its ties with Egyptian government agencies.

He added that the initial public offering (IPO) does not aim to increase the company’s capital at this point, but rather to allow the exit of a group of Egyptian investors.

“There is no intention to offer any of the Spanish-held shares on the stock exchange in the future,” he said.

Magrina declined to answer a question regarding his expectations for future profit growth in light of the government’s plan to raise energy prices for cement factories, saying only that “we are ready to use coal in the event of special ministerial approval on environmental standards.”

Karim Awad, Co-CEO of EFG-Hermes, said: “The company has sufficient liquidity, and the stock market IPO serves only to replace part of the company’s stock ownership.”

Arabian Cement was founded by a group of Egyptian shareholders in 1997 to set up a cement plant with a production capacity of 2.5m tons per year for the production of grey cement for the Egyptian market.

EGYPT: Decision to use coal in cement industry is irreversible

Prime minister denies reports that Suez would be transferred to the authority of Cairo governorate.

The government’s decision to use coal as an energy source in the cement industry is final and irreversible in solving the country’s energy crisis, Prime Minister Ibrahim Mehleb said Monday.

The Ministry of Environment is expected to issue regulations governing the import of coal and its use in cement plants next month.

Egypt is experiencing a severe fuel crisis caused by a shortage in gas production and increasing consumption as the summer months of high electricity consumption are approaching.

In remarks made during his visit to Suez Governorate, Mehleb denied reports about the government’s intention to transfer authority over Suez to the Cairo governorate. He also said he had not canceled the agreement signed by Egyptian television concerning an advertising agreement between Lebanese agency Choueiri and MBC, whereby Egyptian television will receive EGP 300m annually for a period of three years.

The prime minister also cited a number of projects the government is implementing in the Al-Adabia area, with total costs reaching EGP 79m, pointing out that work is underway to improve the Al-Adabia road to Suez, of 16km in length. He added that a 2km path is being built to allow the entry of trucks, in addition to a 390 metre pier in the city’s port. In addition, four electronic gates are being built and four parking spaces for trucks.

EGYPT: Suez Cement Company invests EGP 300m to convert plants to use coal power

The company is still waiting for final approval from the Ministry of Environment to use the pollution-heavy fuel following a controversial cabinet decision to import coal 

The Suez Cement Company announced plans Sunday to invest EGP 300m to convert two out of its four plants to use coal rather than natural gas following a controversial government decision to import the pollution-heavy fuel as a means of addressing power shortages.

The conversion process for each plant will cost around EGP 150m, said Mohammed Shanan, the cement company’s business development director.

Another company source estimated the overhaul will take between 6 to 8 months.

The company is still waiting for final approval from the Ministry of Environment to use coal in the production of cement, the company source said.

The production capacity of the Suez Cement Company fell 50% during the first quarter of this year as a result of fuel shortages, which has led to a 50% decline in sales, Al-Borsa reported.

The Egyptian Cabinet approved the use of coal for power generation last month, despite the disapproval of Minister of Environment Laila Iskandar, in response to protests from factories. The Egyptian government had cut natural gas supply to factories in an attempt to conserve energy resources.

A number of nongovernmental organisations, including the Egyptian Initiative for Personal Rights, condemned the decision to use coal in a statement last month, forecasting that it will have “devastating consequences on health and the economy.”

The Egyptian Centre for Economic and Social Rights, with support from the Doctor’s Syndicate, has filed a lawsuit against interim Prime Minister Ibrahim Mehleb, President Adly Mansour, and the ministers of trade, petroleum, electricity, and environmental affairs in an attempt to block the use of coal in Egypt.

ALGERIA: L’égyptien ASEC Cement veut céder sa participation minoritaire

Dans le cas de la cimenterie de Zahana, la compagnie égyptienne ne dit pas tout sur les raisons de cette volonté de se désengager du capital de l’entreprise algérienne.

La compagnie égyptienne ASEC Cement, une filiale de Citadel Capital, a entamé des «pourparlers préliminaires» avec GICA, la société holding qui contrôle toutes les entités du secteur public opérant dans le domaine des matériaux de construction, en vue de céder sa participation minoritaire dans la cimenterie publique de Zahana, implantée dans la wilaya de Mascara, a annoncé Citadel Capital dans un communiqué, rendu public jeudi dernier. Yahia Bachir, directeur général de GICA, avait déclaré publiquement que l’Etat algérien étudie le rachat des actions minoritaires de son partenaire égyptien dans un projet de cimenterie.

Ahmed Heikal, président et fondateur de Citadel Capital, a confirmé que sa firme est «actuellement en pourparlers préliminaires avec GICA en vue d’obtenir la sortie de la participation minoritaire d’ASEC Cement dans Zahana». Une démarche qui est, d’après lui, «en ligne avec notre objectif à l’avenir de tenir seulement des participations majoritaires dans l’ensemble de nos filiales de base». La firme de capital-investissement, basée au Caire, ayant des investissements au Moyen-Orient et en Afrique du Nord, cherche à se dessaisir aussi des avoirs non stratégiques au cours des trois ou plusieurs années à venir.

Dans le cas de la cimenterie de Zahana, la compagnie égyptienne ne dit pas tout sur les raisons de cette volonté de se désengager du capital de l’entreprise algérienne. Fin 2008, ASEC Cement avait acquis une participation de 35% dans la cimenterie de Zahana, propriété de l’Etat algérien, assortie d’un droit de management, pour un montant de 32,6 millions d’euros. L’objectif était de porter ses capacités de production de 800 000 tonnes de clinker par an à 2 millions de tonnes/an.

Mais il semble que cet engagement n’ait pas été respecté, puisque seulement les travaux de génie civil pour la réalisation d’un nouveau broyeur pour augmenter la production de clinker à 1 million de tonnes et celle de ciment à 1,2 million de tonnes ont été achevés. Récemment, le président de GICA, Bachir Yahia, indiquait à Oran que «le GICA a signé une convention permettant à la société égyptienne de gérer l’usine de Zahana, mais les objectifs tracés concernant notamment l’apport de l’expérience et l’amélioration du rendement ne sont pas concluants». Cette usine produit 750 000 tonnes de ciment/an, ce qui nécessite seulement 300 travailleurs au lieu de 750 actuellement, dont 164 recrutés en 2011 dans le cadre social, selon les explications du responsable algérien.

La direction du GICA, avait-t-il précisé, «évalue l’expérience de manière objective et rationnelle pour sortir avec une décision qui satisfait toutes les parties». En plus de la cimenterie de Mascara, ASEC Cement détient une participation de 68% dans une cimenterie de Djelfa, actuellement en construction. C’est le plus important des investissements d’ASEC Cement avec une capacité de production de 3 millions de tonnes par an, pour un coût global qui dépasse les 600 millions de dollars.