Cement market is saturated … there is no need for launching new cement licenses
We reduced production cost by EGP 50 per ton… we broke into Yemeni markets:n Jose Maria
Jose Maria, ACC Chief Executive Officer, sheds light on the main problems which face cement industry in Egypt including high production cost, low demand on cement in addition to launching new cement licenses. In regard with the effect of EGP devaluation, Maria said that this decision will have a neutral impact on ACC’s activities due to decline in local market sales and the company’s in ability to increase exports. He also said that EGP devaluation will have a positive effect on the short term as it will help in attracting new investments to Egyptian market and he also stressed on the necessity of offering more incentives for investors during the next period. Maria stated that there are number of priorities that should top the government’s agenda, including eliminating land pricing problem for the new projects and instituting more legislative reform in addition to avoiding any overlapping between different ministries’ missions, the theme which hinders establishing a lot of the mega projects. “New foreign investors’ concerns regarding transferring money abroad cannot be overlooked” Maria said, stressing on the necessity of creating clear mechanism to guarantee transferring investors’ profits abroad.
He pointed out that the success of EGP devaluation decision depends on achieving all of above targets. He pointed out that the unclear vision of the state’s financial policy in the last 2 years has helped in boosting real estate sector in Egypt, the theme which negatively affects the sale of building and construction materials including cement. He attributed the decline in local market sales to producers surplus , explaining that there are 22 cement companies in the local market producing 70 mn tons annually, while the local consumption has reached 53 mn tons last year. He also revealed
that his company was one of the first companies that have turned to use coal and alternative fuel to cut production cost by about EGP 50 per ton. He said ACC imports coal from Ukraine, Poland, South Africa and Spain, revealing that his Company doesn’t face any difficulties in the import of coal due to the availability of cash in their accounts in Egyptian banks. In regard with buying new cement licenses’ term sheet, Maria said his company is one of the major companies in cement market and we wanted to know all the details, without applying to the new licenses. Ismail Gaber, Chairman of IDA has expected cement gap to reach 24 mn tons in 2023, however, these expectations are untrue. Maria said that may be the government aims at collecting some funds, but it will lose -- for example -$ 2 bn in return of collecting 400 bn, to import all needed equipment for the new plants. He also pointed out that acquiring one of the cement companies which are listed on EGX is less costly than pumping new investments through getting new cement licenses.
Maria stated that ACC is trying its best to break into new markets in the Arab and African region; however, the Egyptian cement is less competitive compared to Turkish, Pakistani and Iranian cement. He also revealed that the Company has succeeded to export cement shipment to Yemeni markets by end of last year. He said that the Company owns 3 ready mix concrete stations, pointing out to the difficulty of investing in this field as some companies do not abide by the environmental regulations. Arabian Cement Company (ACC) was first established in 1997 by a group of Egyptian entrepreneurs, who aspired to establish a leading Egyptian cement company. The cement factory is located in the Suez Governorate.
The company is a joint venture between Cementos La Union, a Spanish investor holding the majority of shares, and a group of Egyptian investors, it produces five million tons of first quality cement. Arabian Cement capitalized at EGP 757.5 million, divided into 378.7 million shares at EGP 2 par value each. It is worth mentioning that ACC net profits has increased to EGP 246,3 mn during the first 9 months of 2015, compared to EGP 201,8 mn during the same period of 2014, with 22% increase.
