Column-Beware Egypt’s smokestack onshoring as cement exports surge: Maguire

By Gavin Maguire

LITTLETON, Colorado (Reuters) – North Africa’s largest economic system and second-largest pure gasoline producer has stepped up the manufacturing and export of a number of extremely energy-intensive commodities as a part of efforts to speed up the expansion of its industrial sector. 

Egypt’s mixed exports of cement, fertilizers and chemical substances doubled between 2022 and 2024 and have grown by 350% since 2019 due to elevated authorities help aimed toward spurring fast industrial enlargement.

The upper output in Egypt has emerged simply as manufacturing of the identical commodities has decreased in Europe, and highlights a rising development within the re-shoring of smokestack sectors away from excessive energy-cost places and areas with air pollution controls.

The juiced-up output throughout Egypt’s heavy trade – which additionally consists of crude oil refining and pure gasoline processing – has helped create precious private-sector jobs within the 112 million inhabitants nation.

However the local weather affect of the sharp swell in output of such energy-intensive and high-polluting merchandise stays an necessary unknown, because of comparatively lax reporting requirements in comparison with components of Europe, North America and Asia.

EXPORT BOOM

Egypt’s exports of cement and clinker – a uncooked materials utilized in cement manufacturing – have been 9.7 million metric tons in 2024, a file quantity practically 3 times bigger than the quantity shipped out in 2022, in line with ship monitoring knowledge from Kpler.

Fertilizer exports from Egypt have been additionally a file in 2024, and confirmed a 70% bounce from 2022 to eight.3 million tons.

Manufacturing knowledge on Egypt’s 2024 cement and fertilizer sectors has but to be launched, however in 2023 the nation ranked eleventh globally with cement output of round 50 million tons, in line with World Cement Affiliation knowledge. Egypt ranked sixth for nitrogen fertilizer output (3.5 million tons) in 2023, in line with the Worldwide Fertilizer Trade Affiliation.

Each the cement and fertilizer sectors have been recognized by the Egyptian authorities as key drivers of financial progress.

To help their continued enlargement, they and different industrial sectors have been allotted fastened costs for his or her pure gasoline provides, which assist them management prices.

Massive authorities infrastructure initiatives are additionally set to spur larger native demand for cement, whereas the federal government not too long ago lifted sponsored native costs of fertilizer to assist enhance margins for fertilizer producers.

The federal government can also be serving to sponsor commerce missions to a number of fast-growing regional markets to assist drive additional gross sales of its industrial merchandise.

BLIND SPOTS

On account of restricted info sharing by energy crops, utilities and heavy trade, it’s unclear what the emissions toll is from this enlargement in Egyptian industrial output.    

Nevertheless, the Worldwide Vitality Company estimates that round 0.8 to 0.9 tons of carbon dioxide (CO2) are discharged for every ton of cement manufacturing and round 2.6 tons of CO2 are emitted for each ton of nitrogen fertilizer produced. 

In consequence, Egypt’s hefty industrial commodity manufacturing totals are more likely to yield a considerable air pollution aftermath.

In 2023, Egypt discharged 279 million tons of CO2 from vitality manufacturing and industrial processes, in line with the Vitality Institute, probably the most amongst North African nations and the twenty fifth largest globally.

That stated, the emissions image is sophisticated by manufacturing modifications which are underway amongst worldwide cement and fertilizer producers who’re trying to spice up plant effectivity ranges and scale back total emissions.

Current shifts inside the worldwide operations footprint of Heidelberg (ETR:HDDG) Supplies are a living proof.

Germany’s largest cement producer halted cement output at its Hanover plant in 2024 because of weak native gross sales, however on the similar time upgraded its Helwan cement facility close to Cairo.

These strikes enabled Heidelberg to higher align manufacturing ranges inside key markets, by lowering output in shrinking markets whereas increasing manufacturing in progress areas.

Nevertheless, the manufacturing modifications additionally opened the corporate to accusations of relocating high-polluting operations out of the Eurozone – the place emissions requirements have gotten stricter – to areas the place air pollution requirements are doubtlessly extra lax.

The precise ensuing emissions affect of those shifts are but to be reported, however knowledge on Heidelberg’s total emissions footprint point out that the corporate has steadily lowered its CO2 discharge, from round 73 million tons in 2019 to 63.2 million tons in 2023, in line with LSEG.

And the upgrades made to Heidelberg’s Helwan plant embrace a brand new waste warmth restoration system that’s anticipated to scale back each vitality use and discharge ranges.

In fact, Heidelberg is only one of many cement producers with operations in Egypt, and different companies might have completely different emissions and effectivity requirements.

However the dynamic shifts underway throughout Egypt’s industrial panorama spotlight an necessary new local weather danger stemming from the quickly rising scale of business output in North Africa, even because the heft of those self same sectors shrinks elsewhere.

The opinions expressed listed here are these of the creator, a market analyst for Reuters.