Egypt aims to start cement bid process by mid-2010

Egypt is targeting to start an international bidding process to grant cement licences by the middle of this year, the head of the Industrial Development Authority (IDA) said on Monday.

"We’re presenting the case to the High (Supreme) Council of Energy to get their blessing," said Amr Assal, chairman of IDA in an interview with Reuters. "Afterwards, we will announce the international bidding process."

Asked whether the bidding would start by the middle of the year, Assal said, "This is our target, June-July."

The country will be offering eight licences with 1.5 million tons of capacity, he said, adding that so far 12 companies had formally expressed their interest in the licences.

Of these, seven were Egyptian and among the rest there were Chinese, Turkish and Italian companies.

Egypt granted six greenfield cement factory licences in late 2007 in a bid to boost production after rising local prices drove the government to impose an export duty in February.

Assal said the country’s current cement capacity was around 50 million tons, which he expected to rise around 60 million tons by 2011 to meet the buoyant local demand.

"In the year 2009, our cement consumption increased by 26 percent," Assal said, amid a fall in many other countries as the global economic downturn hit demand in the global construction sector.

But he expected the demand growth to go back to "normal levels" this year, which he sees at seven to ten percent. But to meet this demand, the country’s capacity will rise to around 80 million tons in the next five years, he added.

The land for the cement factories will be located in remote areas to avoid pollution in residential places.

"Our plan is new areas like Marsa Mattrouh, Upper Egypt, remote areas. Also these kinds of investment can create economic growth for these areas," he said.

Assal said IDA would not offer any steel factory licences as currently there was enough capacity and the local production was not even running at full capacity because of the high level of imports.

"(They) local producers are very much affected by the imports," Assal said, adding that the country imported 2.5 million tons of steel last year, with almost 80 percent of it coming from Turkey.

Egypt is looking into a possible anti-dumping action against Turkish steel imports. Assal did not give any details about when the investigation would be completed.

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