During a meeting with participants at the Euromoney Conference last Wednesday, I posed a question to the Minister of Trade and Industry, Rashid Mohammed Rashid, regarding the economic logic behind the government’s expansion of the cement industry. This comes despite an insufficient energy supply for production, the higher cost of locally produced cement compared with imports, and expectations that production costs will rise as factories are required to secure their own energy. I asked whether it would make more sense for the government to rely on cement imports to meet the anticipated demand gap rather than bearing the burden of expanding production.
Rashid gave a detailed response, defending the government’s expansion strategy as a means of addressing the expected increase in demand, which the Industrial Development Authority (IDA) estimates will reach 77.5 million tonnes by 2015, with a supply shortfall of 17.5 million tonnes. He justified the government’s decision by weighing two options:
The first is importing the energy needed for this expansion, treating it as an industrial input—something most industrial nations do. The second, which the government dismissed, is importing cement as a finished product. Rashid argued that the first option is the more economically viable, not only for bridging the supply gap but also for making use of locally available raw materials.
Additionally, he pointed to Egypt’s well-established infrastructure for cement production, which should not go to waste, as well as the country’s expertise in the industry, developed over years of know-how. He insisted that this approach would contribute to economic growth, reduce reliance on imports, and create jobs in this vital sector.
Rashid explained that the government has identified industries that consume vast amounts of energy and has forecasted that, by 2015, the available energy supply will be insufficient to meet the needs of the cement sector. He posed the question: ‘Should we import cement or energy? Why not import energy, like the rest of the world does? If oil and gas discoveries are not enough to build factories, it would be unwise to halt industrial expansion altogether.’
The IDA had previously planned to issue 12 new cement licences this year—eight of them in the first half of the year—yet none have been issued so far. These licences are intended to help bridge the gap between cement production and consumption. According to an IDA study, the new factories will require 1.5 billion cubic metres of gas and 300 megawatts of electricity. This has raised concerns about the wisdom of allocating such vast energy resources to these projects at a time when the local market is already struggling with frequent power outages due to high demand.
Imported cement, particularly from Turkey, is priced at around £400 per tonne (delivered to port), while domestically produced cement costs approximately £500 per tonne. This price disparity has led to an increase in the share of imported cement in total consumption, rising to 3.3% in the first five months of 2010 compared with just 0.2% during the same period last year.
The government now faces the challenge of narrowing this price gap, reducing production costs, and cracking down on local price manipulation. An even greater challenge is minimising the environmental damage caused by cement production—an economic burden in its own right, given the healthcare costs associated with diseases linked to the industry, affecting both workers and residents of nearby areas.
This article is originally published by AlBorsa in Arabic and later AI-translated by South Push.