Egypt granted six licences on Sunday to build greenfield cement plants as part of efforts to increase domestic supply, the first to Nile Valley cement for E£251m, officials said.
Local affiliates of Cemex and Lafarge also won licences to expand production by 1.5Mta. Cemex affiliate Assiut Cement bid E£202m for the licence and Lafarge affiliate Beni Suef Cement bid E£134.50m for a second licence.
"We don’t feel it is the right way to pay for an expansion but we participated because we want to compete openly and fairly in Egypt," said Salem Sousou, director general of Lafarge in Egypt. "The company will double its production capacity by this licence."
Winning bids for the greenfield licences ranged from E£22m to E£251m, and brought in a total of E£801m. Auctions for two additional licences for greenfield plants were cancelled due to a lack of bids.
Government officials have said cement supply should increase 19Mt-20Mta within five years after the new plants come on line, and following the expansion of six other existing factories.
A Nile Valley official, Osama Fawzy, said his company would build its plant in Beni Suef, where it had already invested E£35m. Nile Valley is majority-owned by Horus Cement, which Fawzy said was owned by investment bank EFG-Hermes.
"It was important for us to get the first licence. Whoever gets the first licence has the right to choose the location," he said.
Licences for greenfield plants also went to:
- El Sewedy Cement for E£201m for a plant in Suez. El Sewedy is owned by Egypt’s El Sewedy Group, the parent company to El Sewedy Cables.
- British-owned al-Arabiya al-Wataniya for E£200m for a plant in Minya.
- El-Nahda Industries for E£83m for a plant in Qena. El-Nahda is partly owned by National Cement and several other state-owned enterprises.
- North Sinai Cement for E£44m for a plant in northern Sinai. The company is owned by Mohamed Farid Khamis, the main shareholder in Oriental Weavers.
- Egypt Kuwait Holding for E£22m for a plant in Assiut.
Winning firms will pay 25 per cent of the licence fee in a month and the remainder three months later. Rising local cement prices drove the ministry of industry to introduce an export duty in February that rose to 85 pounds a tonne in August.