Mona El-Fiqi takes stock of the competition among local, Arab and foreign companies to secure licences for new cement factory ports As a strategic step to increase cement production for local and overseas consumption, the Industrial Development Authority (IDA) held a tender last week for licences to set up new cement factories. Nine bidders competed for eight licences to establish new cement production lines, while five companies competed for licences to expand two existing cement factories. With total investments expected to reach LE17 billion and provide 40,000 jobs, the production capacity of each factory is estimated at 1.5 million tonnes of cement annually. The total value of the licences for new factories came at LE801 million, while that for expansion lines reached the LE336.5 million. IDA Chairman Amr Assal stated that the revenues from the tender will be channelled to the Industrial Zones Development Fund (IZDF). This is part of the government's plan to allocate LE3 billion to IZDF to develop the infrastructure of industrial zones. Assal told Al-Ahram Weekly that the cement sector is attracting local, Arab and foreign investors due to a large demand in the local market, which reflects a notable growth in the economic performance. He added that having companies bid for the licences is the best way to ensure fairness in awarding the permits, and allowed the winner to choose which governorate to build a new factory. During the first session of the tender, Wadi Al-Nil Company won a license costing LE251 million to establish a cement factory in Beni Sweif; Al-Sewedy for Cement won the second at LE201 million for a new production line in Suez; the Arab National Company for Cement paid LE200 million for another licence to launch a factory in Minya. Meanwhile, Al-Nahda for Industries was awarded a licence at LE83 million to build a factory in Qena; another licence at a value of LE44 million went to North Sinai Cement Company for a new production line in North Sinai; the Egyptian Kuwaiti Holding Company secured a new licence worth LE22 million for a new factory in Assiut. In the second session, the two winners for expansion lines were Assiut Cement Company, which paid LE202 million, and Beni Sweif Cement Company at a cost of LE134.5 million. Assal announced that the winners should pay 25 per cent of the value of the licence within 30 days of the tender, and the rest in the next three months. Once the entire fee is collected, the licence will be issued within one week. Minister of Trade and Industry Rachid Mohamed Rachid explained that the licences stipulate that production lines must use at least 25 per cent local input. Rachid hoped to increase this figure to eventually reach 35 per cent. According to a study by the Ministry of Trade and Industry, local market needs stands at 30 million tonnes annually, while total annual production is estimated at 38 million tonnes. But due to an increase in the price of cement on the international market, producers find it more lucrative to export their goods. As a result, supply to the local market dropped and cement prices rose. In 2011, local demand on cement is expected to reach 55 million tonnes annually, according to the study. The government's move to establish new cement factories aims at increasing local production to meet the expected hike in demand and reduce prices.
