Reuters reported that Egypt's Ministry of Trade and Industry has approved a settlement scheme aimed at resolving the outstanding dispute over five steel manufacturing licenses that were withdrawn from four Egyptian steelmakers in September 2011.
The settlement scheme stipulates that the four companies pay the licence fees to the government, 15% up front, and the rest in five year installments.
Mr Samir Noamany, head of sales at Ezz Steel, said that "This was the decision reached by the industry minister, but it’s still awaiting Cabinet approval."
In September 2011, an Egyptian court ruled that recently issued steel manufacturing licenses be withdrawn from Ezz Steel, Beshay steel, Suez Steel and Tiba Steel.
According to the new settlement agreement, Ezz Steel will pay a total of EGP 660 million for two licenses. Suez Steel will pay EGP 385 million, Beshay EGP 385 million and Tiba EGP 38 million for one licence each.
Mr Noamany, however, told Ahram Online that the companies in question had not yet formally approved the scheme. He declined to say whether Ezz Steel, the biggest steelmaker in the Middle East, had approved the scheme or not. He added that "This settlement is separate from ongoing legal procedures, since the companies are appealing the court verdict that called for the withdrawal of the licenses in the first place."
Construction of the Beshay Steel and Suez Steel manufacturing plants has already begun, but exact details about the projects are not available, since both companies are not listed on the local stock exchange. According to one informed source, Beshay has already completed about 80% of its steel factory.
Ezz Steel plans to build two plants, the first of which is already 70% completed at a total investment of EGP 2.4 billion. Construction of the second has yet to begin.
One industry analyst said on condition of anonymity that "Ezz Steel will not be severely affected by the extra amount it will have to pay for the two licenses. The license value only amounts to about 11% of total CAPEX invested in Ezz's factories."
Both Ezz factories are being built for the purpose of vertical integration, meaning that they will not necessarily boost production, but will help reduce costs for other Ezz operations.
Industry insiders said that the four steelmakers are expected to accept the settlement scheme, especially given that they already have made significant investments on the ground.
(Sourced from www.ahram.org.eg)
