Egyptian cement market has great short-term prospects and is very promising in the long term prospects as there are strong opportunities in the future. In addition, the country is currently enjoying political stability because any new investment in the cement sector would cost at least $200m, which requires political stability, according to Malcolm Shelbourne, CEO of INTERCEM, the cement industry conference.
“I think that Egypt is now witnessing political stability and the climate is improving politically, besides, more tourists are pouring into Egypt and thus Egypt has become a not risky place compared to the past few years,” Shelbourne said.
Additionally, he sees that the number of foreign investors in the Egyptian cement market can be seen, noting that about 70% of investors in the market are foreigners. This gives the impression that the industry attracts foreign investment and that he has no knowledge that there are foreign investors who will exit from the Egyptian market or other investors who are not considering investing in the Egyptian market.
He said that Egypt’s cement industry is promising and production is eligible for exporting to Africa and the US.
Meanwhile, Shelbourne elaborated that there are markets in Africa considered as most promising for importing Egyptian cement, as Egypt has potential to export to west and east Africa, however, central African market is difficult. Moreover, the American market is also one of the potential markets for importing Egyptian cement, as it has imported Egyptian cement in the past, as since 10-15 years ago, while the US imported 30m tonnes of cement globally and imported small amounts from Egypt, hence this can happen.
Shelbourne added that the future of Egypt’s cement industry is promising as most of the demographics are under 40-years-old, thus the real drive of demand for cement is in schools, hospitals, roads, and houses. Evidently, from the medium to long turn view the future of this industry is very good.
Regarding the launch of a new state cement business in Beni Suef, Shelbourne noted that the government wants to protect the strategic interest of the nation to grantee to provide the cement for people in certain price. Realistically, the market is competitive here in Egypt and the government wants to make sure to continue supplying such strategic product.
In August, the Egyptian government has inaugurated the Beni Suef cement complex with an investment of $1.1bn to produce 20% of Egypt’s cement, whereby cement companies view that it might badly affect the industry through increasing the supply more than the demand.
Regarding the low competitiveness of the Egyptian cement compared to foreign markets, he said that the global market is very competitive, for example Turkey is one of the strongest producers in the region, as well as Iran, which provides a great subsidy for energy in the cement industry and is regarded as the most important producer and therefore Egypt is less competitive than those countries, because of the high prices of their product and the price of local energy is one of the factors inhibiting the competitiveness of the Egyptian product.
“However, I think the Egyptian government has begun to take steps to address this with a trend to open export markets abroad, including the replacement of high-cost resources of energy to use other alternatives, such as coal and other low-cost renewable resources,” he pointed out.
“In terms of the cement industry in general, the industry tends to reduce the cost of energy in the direction of other sources, but the cost controls the direction to a new resource, the energy prices subject to several variables, may be the most important political change that may change the price of energy globally.”
He believes that the price of energy will stabilise for a period at a reasonable price, unless something is done globally.
The INTERCEM conference is being held for the sixth time in the Arab region and is being held for 20 years. This year, we hold the conference in Egypt for our interest in the Egyptian role and shed light on the Egyptian role in the African market. Egypt is the most important country in Africa. Furthermore, Egypt can link the engineering industry with the cement industry in African cities; Africa is turning to China for technology, why does not Egypt play the role, he said.