The Egyptian cement market is considered to be one of the largest in the world, with 21 cement producers that own and operate 24 plants and 43 kilns. Providing work for over 50 000 people and indirectly supporting an additional 200 000, the cement industry is one of Egypt's most important economic drivers.

Suez Cement Group of Companies (SCGC) is one of the oldest cement producers in Egypt, the Tourah plant having begun operations in 1927. The company's five production facilities are located in Suez, Kattameya, Tourah, Helwan and El Minya. Its manufacturing bases serve the entire country from three locations: Greater Cairo, Suez and Minya. Suez Cement joined the Italcementi Group's industrial network almost ten years ago. Established in 1864, the Italcementi Group is among the top five global cement producers.

Corporate social responsibility is central to the company's mission. Suez Cement believes in the importance of providing meaningful support to the communities where it operates. To date, SCGC has spent US$6 million on education, health and poverty eradication across Egypt. Some of the organisations it supports include: the 57357 Children's Cancer Hospital, the Don Bosco Technical Institute, Egyptian universities, the National Council for Childhood and Motherhood and several other youth-oriented organisations.

Impact of energy shortages on the industry

Demand for cement and production grew steadily until about 2010 and has since entered a period of stability. In 2006, industry players produced 30 million tpa of cement. As of last year, that number had jumped to 50 million t, due to a 200% increase in the producers. Total cement production capacity stands at 70 million t. While this figure is much higher than current market consumption, it is anticipated that demand will grow in the near future as Egypt's economy and construction sector recovers. However, the industry could have difficulty reaching full capacity due to ongoing energy supply shortages. Consequently, Suez Cement has invested in alternative fuels and renewable energy projects. "We are hopeful the government's stimulus package worth LE60 billion will help return supplies of natural gas and mazut to normal levels through investments in construction that will support infrastruture capacity building," says Bruno Carre, CEO of Suez Cement. The company also believes the private sector will lend its support to such projects, speeding delivery of important services such as electricity.

Alternative fuels and renewable energy projects

Over the years, SCGC has invested more than US$70 million in modernising its five plants, as well as developing alternative fuels and renewable energy projects, including the construction of the first privately owned wind farm in Egypt. "We hope to increase our efficiency and we strongly believe that our long-term success will depend on our ability to meet and exceed the growing expectations of our stakeholders in terms of wealth creation, environmental protection and prosperity for the communities we work in," says Carre.

In this vein, SCGC has reduced its energy consumption by over 10%, the number of industrial accidents by 70%, CO2 emissions by 15%, dust emissions by 30% and water consumption by 40%. It has achieved this through extensive training programmes for employees, investment capital worth US$100 million and the promotion of corporate policies and programmes on safety, the environment and quality control.

SCGC is also focusing on bringing innovation to Egypt. It has extended its product offering in the largest range of cement available to the Egyptian construction industry that it has been recently reorganizing under the i.nova brand. i.nova is an innovative new product system of the Italcementi Group, designed to help customers find the suitable Suez Cement product for each and every project through the reorganization of the portfolio around the concept of performance and use.

Meeting rising demand

"Meeting our energy supply needs is our number one challenge," states Carre. Egypt's limited oil and gas production is part of this challenge; increasingly, these hydrocarbon resources are failing to meet the country's rising energy demands. Indicators show the fuel crisis is unlikely to be alleviated in the near future, despite investment in renewable energy projects. "In 2013, as a result of energy supply shortages, the cement industry's clinker production capacity has fallen by 35% to 40% nationwide, resulting in a lack of production to meet demand," he added. The current challenge is therefore the need to convert from the classical gas and fuel energy mix to a wider fuel mix comparable to what is being used internationally, including solid fuels such as coal and petroleum coke, waste from different sources, and also including renewable energy for the electricity part of their needs. This move towards a different energy mix for cement manufacturing will allow Egyptian-made cement to remain competitive, as energy represents more than 40% of the cost.

Alternative energy production methods

Suez Cement is investing resources in the analysis of other energy production methods, including best practices. Its findings show that solid fuels, such as coal, petcoke and waste-derived fuels could be viable solutions.

"We are in the initial stages of retooling our energy strategy. Our hope is to implement innovative energy production solutions at our plants within the next two to three years, which will entail converting our current infrastructure to support new energy production schemes," explains Carre.

Carre concedes that there are serious concerns about the environmental impacts of coal energy, but points out that research indicates 81% of European cement producers meet their energy needs via coal and petcoke products. Furthermore, many global cement firms depend on coal to power their facilities, even in oil-producing countries like the United Arab Emirates and Kuwait. He emphasises that the European Union boasts some of the most stringent environmental protections in the world, which have prompted coal technology to evolve into a cleaner and more efficient fuel. Continuous improvements in technology have dramatically reduced or eliminated many of the negative environmental impacts traditionally associated with the use of coal.

"We are committed to doing our part to deploy the same technologies as the ones used in Europe, where coal is used as the main source of energy for cement plants without causing harm to the environment or to the health of the population; we plan to install similar filtering and handling equipment here in Egypt," he affirms.

Investment in state-of-the-art technology

In addition to grinding facilities for coal and petroleum coke, SCGC is also building new facilities to collect and process waste from landfills and farms. In December 2013, the company inaugurated the first waste-processing plant located inside Kattameya cement plant that converts pre-sorted waste into fuel. The facility is the first in Egypt and was designed with state-of-the-art equipment and technology. The scheme is part of Suez Cement's strategy to boost the amount of energy it acquires via refuse-derived fuels (RDF). The facility is being built in compliance with Egyptian environmental law and is expected to process 35 Kt of waste and provide up to 20% of the fuels required by the plant.

SCGC believes that opportunities to invest in renewable energy in Egypt are huge. In fact, the company is in the final stages of the design phase of a large wind energy project. Italgen, Suez Cement's parent company, together with other investors, has committed €130 million in the first phase of the first privately-owned wind farm in Gabal El Zeit near Hurghada, which, when completed, will produce enough energy to cover 40% of Suez Cement's power needs. Phase I is slated to produce 120 MW of electricity with the hope of eventually producing 400 MW of power in subsequent phases. The electricity will be transmitted to plants run by Suez Cement as part of the Group's plan to incorporate a higher percentage of renewable power in all of its facilities. Carre says, "Until now, this energy challenge has prevented us from manufacturing the quantities of cement needed by the market. However, I am confident that our strategy with the proposed solutions will enable us to overcome this challenge and remain a market leader."

Construction industry to drive economic growth

The Egyptian economy's recovery includes stimulus packages involving funds earmarked for major infrastructure projects. Suez Cement forecasts that the construction sector will require growing quantities of cement and cement products as the projects get underway. Some of the construction is targeting densely populated areas, while other projects are taking place in previously undeveloped areas to provide housing developments for Egypt's growing population.

Carre is "confident the construction industry will be one of the main drivers of economic growth in the coming years, providing much-needed job opportunities for Egyptians and ensuring demand for cement continues to rise." Suez Cement believes in Egypt's significant growth potential and trusts that once stability is restored, Egyptians will begin to enjoy the economic recovery they have been waiting for.

To be sure, there are bound to be challenges on the way, in terms of budget, trade and energy deficits, as well as falling currency reserves and increasing pressure on impoverished communities. However, the company remains optimistic that Egypt's new government, regional allies and other international donors will help the country solve these issues. "While we have faced many challenges over the last few years, Egypt's economy is headed towards stability," says Hisham Fahmy, CEO of the American Chamber of Commerce in Egypt. "Because of strong industry leaders like Suez Cement leading the way, Egypt's economy will only continue to grow."

The cement industry, with the leadership of Suez Cement, has an important role to play in ensuring the country's economic growth returns by remaining competitive, innovative and a source of employment for tens of thousands. Carre is confident: "We can help Egypt's recovery given our plans to invest in new energy solutions, as well as sustainable environmental practices and corporate social responsibility programmes."