Magazine article The Middle East

Jewel in the Crown

Magazine article The Middle East

Jewel in the Crown

Article excerpt

Egypt's steel sector is on the verge of phenomenal growth. In December the privately owned Ezz Group signed an agreement with Italian plant equipment manufacturer, Danieli, to build Egypt's first flat steel products plant. State-owned ANSDK (Alexandria National Iron and Steel Company) has similar, if less advanced, plans and both companies, together with Egypt's smaller producers, are in the process of doubling the country's construction steel capacity to 4.6m tonnes per annum.

The growth has been spurred by a desire to take advantage of the 15 per cent per annum growth rate of Egypt's construction industry and to meet the country's steel demands through domestic production, as more than 1 million tonnes is currently imported every year.

The jewel in the crown of the current expansion programme is undoubtedly the coup pulled off by Ezz in enticing Danieli to take a 25 per cent equity stake in its $560m, 1 million tonne per year Suez flat products project, which will be based 3kms from the port of Adabiye. Ezz will retain a 40 per cent holding and financing arrangements for the remaining shares are almost in place with three Egyptian banks having welcomed the project as a way of taking some of the excess liquidity out of the booming money market.

The project will facilitate the development of downstream steel-dependent industry and it is anticipated that less than 25 per cent of output will be exported. The Egyptian government has already allocated the requisite funds to allow the necessary expansion of the port. The project's start-up date is expected to be 1999.

Likewise the upgrade and creation of new construction steel facilities, the bulk of which are concentrated around Sadat City and Alexandria and will be completed by 1998, will be targeted at the local market since the considerable production capacity of countries in the region will mitigate against successful exports. …

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