Operating in Egypt – Part 1

The Egyptian cement market is considered to be one of the largest in the world, with 21 cement producers that own and operate 24 plants and 43 kilns. Providing work for over 50 000 people and indirectly supporting an additional 200 000, the cement industry is one of Egypt’s most important economic drivers.

Suez Cement Group of Companies (SCGC) is one of the oldest cement producers in Egypt, the Tourah plant having begun operations in 1927. The company’s five production facilities are located in Suez, Kattameya, Tourah, Helwan and El Minya. Its manufacturing bases serve the entire country from three locations: Greater Cairo, Suez and Minya. Suez Cement joined the Italcementi Group’s industrial network almost ten years ago. Established in 1864, the Italcementi Group is among the top five global cement producers.

Corporate social responsibility is central to the company’s mission. Suez Cement believes in the importance of providing meaningful support to the communities where it operates. To date, SCGC has spent US$6 million on education, health and poverty eradication across Egypt. Some of the organisations it supports include: the 57357 Children’s Cancer Hospital, the Don Bosco Technical Institute, Egyptian universities, the National Council for Childhood and Motherhood and several other youth-oriented organisations.

Impact of energy shortages on the industry

Demand for cement and production grew steadily until about 2010 and has since entered a period of stability. In 2006, industry players produced 30 million tpa of cement. As of last year, that number had jumped to 50 million t, due to a 200% increase in the producers. Total cement production capacity stands at 70 million t. While this figure is much higher than current market consumption, it is anticipated that demand will grow in the near future as Egypt’s economy and construction sector recovers. However, the industry could have difficulty reaching full capacity due to ongoing energy supply shortages. Consequently, Suez Cement has invested in alternative fuels and renewable energy projects. “We are hopeful the government’s stimulus package worth LE60 billion will help return supplies of natural gas and mazut to normal levels through investments in construction that will support infrastruture capacity building,” says Bruno Carré, CEO of Suez Cement. The company also believes the private sector will lend its support to such projects, speeding delivery of important services such as electricity.

Alternative fuels and renewable energy projects

Over the years, SCGC has invested more than US$70 million in modernising its five plants, as well as developing alternative fuels and renewable energy projects, including the construction of the first privately owned wind farm in Egypt. “We hope to increase our efficiency and we strongly believe that our long-term success will depend on our ability to meet and exceed the growing expectations of our stakeholders in terms of wealth creation, environmental protection and prosperity for the communities we work in,” says Carré.

In this vein, SCGC has reduced its energy consumption by over 10%, the number of industrial accidents by 70%, CO2 emissions by 15%, dust emissions by 30% and water consumption by 40%. It has achieved this through extensive training programmes for employees, investment capital worth US$100 million and the promotion of corporate policies and programmes on safety, the environment and quality control.

SCGC is also focusing on bringing innovation to Egypt. It has extended its product offering in the largest range of cement available to the Egyptian construction industry that it has been recently reorganising under the i.nova brand. i.nova is an innovative new product system of the Italcementi Group, designed to help customers find the suitable Suez Cement product for each and every project through the reorganisation of the portfolio around the concept of performance and use.

Biomass used in the cement kilns.

Meeting rising demand

“Meeting our energy supply needs is our number one challenge,” states Carré. Egypt’s limited oil and gas production is part of this challenge; increasingly, these hydrocarbon resources are failing to meet the country’s rising energy demands. Indicators show the fuel crisis is unlikely to be alleviated in the near future, despite investment in renewable energy projects. “In 2013, as a result of energy supply shortages, the cement industry’s clinker production capacity has fallen by 35% to 40% nationwide, resulting in a lack of production to meet demand,” he added. The current challenge is therefore the need to convert from the classical gas and fuel energy mix to a wider fuel mix comparable to what is being used internationally, including solid fuels such as coal and petroleum coke, waste from different sources, and also including renewable energy for the electricity part of their needs. This move towards a different energy mix for cement manufacturing will allow Egyptian-made cement to remain competitive, as energy represents more than 40% of the cost.

Read Part 2 of 'Operating in Egypt' here.

Written by Fayrouz Saad. This is an abridged version of the full article, which appeared in World Cement’s May 2014 issue. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/africa-middle-east/29042014/operating_in_egypt_part_1_91/