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Suez Cement managing director: Construction sector pick-up ‘critical’ to economy

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Managing Director of Suez Cement Group, Bruno Carre spoke to Daily News Egypt about the company’s current projects and products

Managing director of Suez Cement Bruno Carre spoke to Daily News about the company’s projects on the sidelines of Interbuild 2013. (Handed out to the Daily News Egypt)

Managing director of Suez Cement Bruno Carre spoke to Daily News about the company’s projects on the sidelines of Interbuild 2013.
(Handed out to the Daily News Egypt)

What are Suez Cement’s main projects in Egypt right now?

 

Our current project is our involvement in the Interbuild conference, and to present our range of products to customers, builders and construction companies. We offer a wide range of cement products here in Egypt, for all kinds of applications; buildings, structural, non-structural, foundations, water resistance, plastering and more. We’re also showing off some innovative products that we’ve developed in the past several years and that we’ve been launching in other countries for new applications. We have one product, TX Active, which [tackles] pollution; it takes emissions from cars in traffic and makes buildings cleaner by taking pollution out of the air. We’re also presenting i.light, a transparent concrete, allowing for some light to pass through. We are hoping to see the construction sector regaining some strength in the coming months.

 

Has the company endured losses since the outbreak of the revolution?

 

Egypt has been going through a difficult period, and our company has been suffering like most companies, with some difficulties in delivering our products to market, some labour unrest, and as of recently, major energy delivery shortages. These are not linked with the revolution per se, but with the general state of the economy in the country.

 

How are fuel shortages affecting the production of Suez Cement?

 

This has a big impact on us, yes. Since the beginning of the year, we have lost something like 35% of our production due to the energy shortages, and we expect that to be worse in the coming month as the priority for energy delivery is for power generation, and hopefully in the fall the situation will improve. We also [are not currently manufacturing] enough to serve the market, so we [were initially] importing clinker, a basic material to make cement, to complement our production here for the lack of energy.

 

So is importing clinker the only way that the company is overcoming the energy crisis?  

 

Short-term only, because that’s the only option we have. But as a medium-term solution we are preparing investments to switch to other fuels. In Egypt, we have been consuming, for years, only gas and mazut [low quality fuel oil]. [These are] heavy fuels, and in very tight supply right now, so we are willing to move our plans towards different fuels like coal or waste, which are widely used in many countries, developed as well as emerging, such as the UAE and Turkey. They are all using coal and coke, and in Europe the whole industry is based on coal and waste, so coal is a product that is not produced much in Egypt and most of it has to be imported. Waste however, is available in the country, [so] we’re preparing it and making it available for our process to replace gas and fuel. These all represent a lot of investments, and we’re waiting for the government to make a decision, because this is a sector that is heavily regulated in Egypt. We are hopeful that the government will make the right decision soon so that we can quickly make our investments and start to switch to these new fuels within the year.

 

What about the company’s corporate social responsibility? How has that changed since the revolution?

 

Since the revolution, we have done a lot, but we have tried to do it differently. Before the revolution, we used to have a lot of partnerships with NGOs, and as you know, the NGOs have been facing a difficult time. So we are totally changing our approach to social responsibility. We’ve been working very closely with communities in which we had planned to support programs. We’ve been working with universities like Helwan University and the American University in Cairo, where we have funded programs or financed students so that they can get to a higher level of education. We are also working with local schools to help them with the equipment and food. So we basically have replaced what we were doing with NGOs with initiatives that are may be less visible because they are a collection of small projects.

 

 

On the environment front, has the company adopted any measures to go greener?

 

Yes, we have been doing that for many years now. We have a long-term plan, in which we are already investing in new filters to minimise emissions, and we had a three-year programme which ended last year and now we have another three-year programme which we have started where we are going to install a new generation of filters in our different plants. Last year, it was the Torah plant, and as we speak, we’re now installing these in Helwan. We’ll be installing more filters in Suez and Katameya next year. All our plants will be fully equipped with state of the art filtering technology, and that will reduce emissions.

 

There had been a delay in a significant investment in new production lines. Has there been a new timeline set for that?

 

It is true that we had a project for a new production line. But a new production line means new capacity, and it is a decision that has to be market-driven. And since the market is not very strong, as I discussed earlier, this decision has to be basically put on hold until the market is showing more strength. Right now, we are producing 65% of our own capacity, so we have ample room for more production. [As for the investment you mentioned,] this was for a new line of around 1.5 to 2 million tonnes of cement, and the investment is in the range of EGP 1.5bn.

 

 

 Is the company planning to issue any bonds or sukuk?

 

We are not planning to issue any debts, whatever the form of the debt is.

 

What is the company’s current outstanding debt?

 

We are a listed company, so we are publishing our figures on a quarterly basis, and the company is currently debt-free. We are fortunate [to be debt-free] in this difficult situation, and we even have some positive cash reserves that we are using to finance our investments. Our overall investments programme, if you include the energy and environmentally friendly filtering project, will be an excess of EGP 1bn.

How much does Suez Cement contribute to the total cement exports from Egypt?

 

Last year we exported around 6% of our activity, and that should be around EGP 200m worth of exports. It is not a very big number per se, but it is significant, and it is growing. It is basically protecting the jobs here, because since the market has been down, we’ve been trying to maintain our activities by exporting, and unfortunately this year this number is lower, because most of the exports were going to markets where we are facing competition and our costs are not so competitive right now.

 

In general, how do you see the construction sector in Egypt?

 

The construction sector is not very strong, and it is heavily dependent on the informal sector, ie the buildings that are not fully part of an authorised development plan. This is not good because it is not sustainable for the long-term. So we really need to have this sector reinforced by new, fully-authorised projects for infrastructure, for buildings and commercial applications, as well. For a country like Egypt, this represents a main source of growth and employment, so it is very critical that this whole construction market picks up again.

 

Is Suez Cement planning to tap any regional markets?

 

We are an industry where the location of our plants is [largely dictated by] the market that we serve because cement doesn’t travel much. So, what we are doing is that we are trying to increase our presence in the market? We are developing our logistic offers and we are developing, as we speak, a new warehouse in the delta in Qaliubiya to be closer to our customers and offer them better service, so that they don’t have to drive all the way to our plant in Cairo or Sokhna area. This way they can get cement easily.


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