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North Sinai Cement predicts rapid sector expansion

World Cement,

Recent predictions made by an industry executive suggest Egypt's cement sector will shake off a property crisis and expand production capacity by 30% by the end of 2012. This will be achieved through growth in population, infrastructure demand and exports.

"The cement sector can currently produce 50 million tpa and I expect it to reach a capacity of 65 million t by the end of 2012," North Sinai Cement Chairman Abdel Hameed Selmy stated in a recent interview.

Over the next 18 months, several new players are due to enter Egypt's cement sector after the previous government handed out licences to control the surging demand through increasing output.

The government has been forced to cut its economic growth forecast, since the popular uprising ousted long-time President Hosni Mubarak in February, and intensified a crisis in the once-booming real estate sector, a major cement consumer.

Selmy said the cement industry faced challenges such as unclear regulation and unstable demand due to the country’s revolution. The Chairman was optimistic however, that enough buyers would justify the extra cement industry capacity.

"The future is very promising," he said. "The market has an increasing population and demand for infrastructure. I think stability should come once elections (set for September of this year) are over."

Selmy also dismissed the long-term damage from legal challenges to sales of state land that are hammering real estate.

"The Egyptian cement industry is not threatened by what is happening in real estate," he said, adding, "It can always shift to exporting and the global market is receptive to Egyptian cement because it is highly competitive in price and quality."

The company is about to resume the 27-month long construction of its first, 1.8 million tpa line after it was delayed when the government withdrew its licence. A court has since restored the licence and the company aims to double its EGP1 billion capital by year-end to fund construction of the line.

Selmy noted the court decision to restore North Sinai Cement's production licence showed the cooperative nature of the post-revolution authorities.

North Sinai Cement is owned by 88 Egyptian investors, the biggest being state-owned Banque Misr with a 13.5% stake and Mohamed Khamis, the chairman of Oriental Weavers with a 13.5% stake, according to the company.

North Sinai competes with companies such as South Valley Cement, National Cement and Suez Cement.

More information about the cement industry in Egypt and in the neighbouring Mashreq countries, can be found in the Regional Report in WORLD CEMENT’s upcoming June 2011 issue, available for subscribers to download.

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