Egypt’s Ezz Steel Plans $1 Bln Investment
Egypt’s largest steel maker Ezz Steel (ESRS) plans to invest $1 billion to build two steel plants in the country once the government pushes through a stimulus package to boost spending on large infrastructure projects, a firm official said.
Kamel Galal, the company’s investor relations manager, told Reuters that his firm was planning to build the plants in Ain el-Sokhna, a region near the strategic Suez Canal.
He did not give a time frame for the projects. One would be a direct reduced iron factory with an annual capacity of 1.85 million tonnes and the second a flat steel plant with a capacity of 1.2 million tonnes.
“We already have the land and the licences for two brand new factories,” he said.
The economic slump, violent unrest and political disarray since a popular uprising toppled autocrat Hosni Mubarak in 2011 has hurt demand for cement and steel used in construction.
Steel mills and other energy-intensive industries have also faced power cuts or been forced to buy electricity from private suppliers at high prices.
The army-backed government, which took power after Islamist President Mohamed Mursi was ousted in July, is promising to resolve problems such as power shortages, using some of the $12 billion in aid promised by Egypt’s wealthy Gulf Arab allies.
Earlier this month the government announced it would spend 29.6 billion Egyptian pounds on a stimulus package, a third more than previously planned .
The government has said investments would be aimed towards labour-intensive projects and services that helped the poor.
“It’s a matter of ‘Show me the money’. We have to start seeing the government’s stimulus package realized. The direction is great, but it needs to start showing,” Galal said.
MORE CHALLENGES
Galal said the government had to commit to spending on large infrastructure projects which had all but “disappeared”.
Saudi Arabia, Kuwait and the United Arab Emirates, fiercely opposed to Mursi’s Muslim Brotherhood movement, promised more than $12 billion in loans, grants and fuel shipments after the army, prompted by mass protests, overthrew the country’s first democratically elected president.
But Ezz, a leading Middle East steel producer, faces an added challenge besides the economy.
Founder Ahmed Ezz quit the board of Ezz Steel and its subsidiary Ezz Dekheila in 2011 to fight corruption charges as prosecutors investigated figures closely associated with the ousted government of Hosni Mubarak.
Ezz, a top official in Mubarak’s now disbanded political party, was jailed in 2011.
“Of course Ahmed Ezz being in jail has affected us globally,” Galal said. “Banks delayed their loans, the country changed the way it viewed us, the way people generally treated us changed.”
He said a direct reduced iron factory was due to come online in January 2015 that should shave $50 to $100 off the cost of each tonne of iron it makes.
Source: Reuters
