Egyptian Steel is pushing ahead with ambitious expansion plans to more than quadruple production, despite widespread shortages of letters of credit (L/Cs) and energy that have put the brakes on the activities of most firms in Egypt's steel sector.

Trial production at the new Bani Soueif plant is starting in December, although another project at Ain Soukhna has been delayed until late next year.

L/C shortages

Heavy industries in Egypt have struggled with capital restrictions that have substantially stemmed the flow of L/Cs that are much needed by steel producers.

The restrictions were introduced in February to counter a black market in US dollars, but have left firms struggling to open L/Cs to import raw materials.

Industrial operations have also faced severe energy shortages, with many firms forced to cut production due to gas shortages.

Expansion plans

Egyptian Steel now produces 800,000 tonnes of steel per year at two plants in Alexandria and Port Said.

The company, which was co-founded in 2010 by Egyptian steel mogul, Ahmed Abou Hashima and Qatari investor, Shiekh Mohamed Bin Suhaim Al Thani, plans to increase its total capacity to 3.5 million tonnes after launching its two new plants.

Competitive advantages

Egyptian Steel uses advanced energy-saving technologies that have helped it through the country's energy crisis.

The company had also opened L/Cs with banks for its import requirements prior to the worst of the currency crisis and thus experienced fewer difficulties in this respect compared with some of its competitors.

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