ECONOMY

Lafarge-Titan investment

CAIRO – Egyptian joint venture Lafarge-Titan Group will spend close to $180 million to boost its cement production capacity by about 50 percent, a senior company executive said on Wednesday. Medhat Stefanos, the group’s commercial director, told Reuters the investment in its Beni Suef cement plant will increase the company’s production capacity to 4.7 million tons per year from 3.1 million tons. «At least 50 percent of the new investment will be financed by banks and the rest from our accumulated profits in Egypt,» he said. Lafarge-Titan was established in 1999 as a 50-50 joint venture of France’s Lafarge Cement and Greece’s Titan. The joint venture has two subsidiaries in Egypt, Beni Suef Cement and Alexandria Portland Cement. It acquired a licence in October, through Beni Suef Cement, to add an extra 1.5 million tons per year production capacity for 134.5 million Egyptian pounds ($24.41 million). The Egyptian government expects local consumption of cement to reach about 55 million tons per year by 2011 and auctioned eight licences in October to add more capacity to the sector, which currently produces 38 million tons per year, of which 30 million are consumed locally. «I am not sure consumption will reach the 55 million ton level but it will definitely increase,» Stefanos said. «The strong economic performance and the appreciating pound will push the upward cycle longer until it stabilizes… by 2011.» Cement prices have risen from 132 pounds per ton in 2003 to about 400 pounds in recent months, driving the government to introduce a set of measures during 2007 to control local prices. The rises were driven by record economic growth rates in Egypt in the past two years and a booming real estate sector. The government measures include an export duty of 85 pounds per ton and a government request that the public prosecutor investigate potentially anti-competitive practices at cement firms. Stefanos said he had met the prosecutor to provide information on his firm. «As long as we are still in a free market, we accept the investigation as a tool of monitoring, especially as we have nothing to hide,» he added. He said the government price-control measures would not affect his group’s interest in expanding in Egypt, adding that Lafarge-Titan produces only for the local market. «Anyway, it (the export duty) is a temporary measure and we expect the government to support exports when the market has a huge surplus in the future,» he added.