Egypt's cement sector will shake off a property crisis and expand production capacity by 30 percent by the end of 2012, helped by a growing population, infrastructure demand and exports, an industry executive said.
"The cement sector can currently produce 50 million tons annually and I expect it to reach a capacity of 65 million tons by the end of 2012," North Sinai Cement Chairman Abdel Hameed Selmy told Reuters in an interview on Thursday.
Several new players are due to enter Egypt's cement sector in the coming 18 months after the previous government handed out licenses to boost output against a backdrop of surging demand.
The popular uprising that ousted long-time President Hosni Mubarak in February has forced the government to slash its economic growth forecast and deepened a crisis in the once-booming real estate sector, a major cement consumer.
Selmy said the sector faced challenges such as unclear regulation and unstable demand due to the unrest that unseated Mubarak. But he was optimistic there would be enough buyers to justify the extra cement industry capacity.
"The future is very promising," he said. "The market has an increasing population and demand for infrastructure. I think stability should come once (September) elections are over."
North Sinai Cement is owned by 88 Egyptian investors, the biggest being state-owned Banque Misr with a 13.5 percent stake and Mohamed Khamis, the chairman of Oriental Weavers with a 13.5 percent stake, according to the company.
The company is about to resume construction of its first, 1.8 million ton per year line after it was delayed when the government withdrew its license.
A court has restored the license and the company aims to double its capital of 1 billion Egyptian pounds by year-end to fund construction of the line, which Selmy said should be completed within 27 months.
Selmy said a court decision to restore North Sinai Cement's production license showed post-revolution authorities were taking a more cooperative approach towards the industry.
North Sinai vies with companies such as South Valley Cement, National Cement and Suez Cement.
Selmy brushed off the long-term damage from legal challenges to sales of state land that are hammering real estate.
"The Egyptian cement industry is not threatened by what is happening in real estate," said Selmy. "It can always shift to exporting and the global market is receptive to Egyptian cement because it is highly competitive in price and quality."
