The erosion of foreign currency reserves in Egypt has caused a rise in steel production costs and losses for several steel factories, according to director of marketing at Ezz Steel Company George Matta.
The dollar shortage is worse than the dollar’s increasing value against the pound since the shortage causes a decrease in the production of raw materials, Matta said Wednesday at the Egypt Builders conference.
Matta revealed Ezz Steel sells 8.4m tonnes of steel annually, including 1.8m tonnes that are imported. The complex economic factors and difficulties in import procedures have resulted in a production shortfall; Ezz Steel has produced 4m tonnes fewer than projected by their annual rate.
However the more pressing issue, according to Matta, is that inflation and political instability have foreclosed upon investment opportunities in the Middle East which are directly tied to the success of national mega projects.
“The manpower in Ezz Steel is 50,000 employees and contributes to about 9.7m tonnes produced for the steel industry in Egypt, representing 8.9% of the GDP,” Matta said. “Due to reduced iron productivity this is expected to decrease to 7% of the GDP owing to the high gas consumption of the production process.”