IDA offers contractual terms for new permits for steel production

Egypt's Industrial Development Authority (IDA) on Sunday offered the contractual terms for new production permits for construction steel and billets for LE108 million. The permit includes two million tons of construction steel and one million tons of steel billets.

IDA chief Amr Assal said the cost of the new permits was equivalent to the cost of the previous permits, which were withdrawn from the Saudi Al-Tuwairqi Holding company. He noted that those companies that had previously applied for old permits must reapply in order to receive new permits.

He added that the reason local factories had not been exempted from paying for new permits had been due to the fact that the estimated LE108 million value of the previous permits had been entered into IDA and Ministry of Finance accounts and could not be offered free of charge. He added that all factories to have applied for permits at an earlier date–when conditions were different–had received their permits at no charge.

Assal told Al-Masry Al-Youm that the needed amounts of natural gas and electricity were available to holders of new permits, since they were already included in the Ministry of Industry’s old plan, which was approved by the Ministry of Petroleum. He said priority would be given to existing factories that had not yet received permits and to new companies.

He went on to point out that, in the case of a surplus of permits, companies that had already received permits would be allowed to apply for new ones. These companies include Ezz Steel, Bishai, Suez, Tiba, Arcelormittal and Kharafi Steel. According to Assal, the construction steel permits, estimated at two million tons, will cost more than the billet permits, estimated at one million tons.

In related news, Major-General Fathi Taha, strategic adviser to Arcelormittal, an Indian steel company with operations in Egypt, said the company intended to apply to the IDA for a construction steel production permit–in addition to the permit it already holds for the production of billet and iron pellets–as a first step towards establishing a comprehensive steel manufacturing company in Egypt.

Taha also said the company will have concluded agreements with the ministries of petroleum and electricity by December of this year for the delivery of power to a factory that is set to be built in Suez in early 2011 and which will begin operations within a four-year period.

The IDA had given Arcelormittal a three-month deadline–which will end on 31 December–to begin implementation of the project due to the problems affecting the international steel industry as a result of the unfolding global financial crisis, especially given that the company had already paid LE340 million for the permit.

The new permits are expected to bring in investments worth an estimated LE3.2 billion and provide roughly six thousand new local employment opportunities.

Translated from the Arabic Edition.

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