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02:28 p. M.
Sunday, January 17, 2021
Books – Muhammad Abdel Nasser:
The Council of Ministers issued a clarifying statement on what is being raised about the liquidation of the company “Hierro y Acero”. During the following report, the Ministry of the Business Public Sector reviews important information about the Egyptian Iron and Steel Company, which led to the liquidation decision adopted by the general assembly of the company on 11/1/2021.
The text of the declaration was as follows:
First: We review in the following table the profits / losses of the company during the two decades from 1997-1998 to 2017-2018, based on the study carried out by the Holding Company for Metal Industries in 2019:
The figures shown in the second column refer to achieving marginal profits in most years during the period 1997/1998 to 2002/2003, but in reality they do not reflect reality, since the company used to use credit differences as a result. of the revaluation of assets (land) that amounted to 4,092 million pounds, to obtain benefits, object of objection by the Central Auditing Office.
Regarding the profits obtained by the company during the period 2006/2005 to 2010/2009, they were affected by incidental income not related to the activity, such as income from previous years and provisions that were no longer allocated. In red.
Losses in the next two years 2018/2019 and 2019/2020 have exceeded £ 1.5 billion and £ 1 billion, respectively.
The main reason for achieving these losses is the obsolescence of the technology used and the low concentration of iron extracted from the company’s mines in the oases, which does not exceed 50% on average, which contributes to the large consumption of coke and gas. in the production process and direct cost inflation, such as the concentration required for production. Economically it is in the 60% range. The poor condition of the furnaces and the frequent shutdowns of the fourth furnace (reaching 92%) contributed to the high energy consumption, since the share of the ton produced of energy elements in iron and steel reached 44.3 million thermal units British versus 20.6 million British thermal units / tonne. In competing factories, unlike coke, whose share per ton for the Iron and Steel Company reaches 1,300 kilos, compared to a world average consumption per ton of 300-600 kilos.
Second: We review the following facts about the attempts made by the Ministry and the Holding Company for Metal Industries to get the company off its hook:
– In 2014, the global consulting firm Tata Steel, which specializes in this industry, was commissioned to carry out a comprehensive study of the conditions of the Iron and Steel Company, commissioned by the Holding, and issued its report explaining the type of work required to develop the company, including mines and furnace factories and an estimate of the volume of investments required at that time. The offer book was completed in 2015, but the offer was delayed until mid-2017 and technical offers were opened at the end of 2017.
- In early 2018, Tata Steel was used again to update the study it produced in 2014, due to the passage of 4 years from the date of the first report, and the initial report was received in July 2018, which indicated significant damage to the ovens as a result of malfunctioning during the 4 years. The consultant’s inability to determine the magnitude of the damage, and hence the means of reform, also indicated a very wide range of investments required. The consulting firm requested to operate the furnaces at maximum capacity for a period of 3 consecutive months, with daily monitoring of the results, which the company’s management could not do, since the continuous operation only lasted 12 days.
– In the first quarter of 2019, some specialized international companies were invited to develop and manage the company for a period of 20 years, with financing of at least 100 million dollars, with the provision of incentives to them, the most important of which was to reduce employment to 4 thousand workers and pay the debts of the company, which amounted to around 6.5 billion pounds at that time. . The bid book of 5 companies was withdrawn and a single bid was submitted on the basis of an EPC engagement and not a partnership as required in the prospectus.
– Parallel to the attempt to find a specialized partner, self-structuring procedures were carried out that the holding company carried out under the supervision of the ministry, including the liquidation of some of the growing debts of the Iron and Steel Company with sovereign organizations, banks and the Holding Company, which exceeded 9 billion pounds, and the debts with the Banque Misr and the Ministry of Oil have already been canceled. Worth 1.2 billion pounds.
This confirms the desire of the Ministry of Public Sector to stop the bleeding of the company’s losses and try to develop it.
Third: Regarding the fear of the effect of liquidation of the Iron and Steel Company in the market
It should be noted that the company’s production of 112 thousand tons per year represents less than 1% of the market size, since consumption ranges between 7 and 8 million tons per year, and the volume of production capacity in Egypt is of about 11.8 million tons per year, and about 2 million tons are imported at lower prices. From the local.
Fourth: Regarding questioning the liquidation procedures and not respecting the rights of the workers, we affirm the following:
– The rights of workers are protected in accordance with the law, and the Ministry announced more than once that the program takes into account first the rights of workers, which is what happened in the case of the liquidation of the National Company Cement, for example.
– Sale and liquidation procedures are governed by law in detail and are supervised by control bodies, headed by the Central Audit Body, either in the Steel Company or in any other company, because the law does not differ according to the size of the company or its importance.
The Ministry affirms its commitment to develop its subsidiaries in all sectors, provided that the project is economically viable, some examples are given below:
– A plan has been drawn up for the development of the Delta Steel Company under the supervision of the Holding and sponsored by the Ministry of the Business Public Sector, which contemplates doubling the energy of 46,000 tons of billets, which are produced at a loss, to 500,000 tons per year with induction furnace technology, in addition to establishing a smelter and steel foundry with a production capacity of 10 thousand tons per year, at a cost of approximately 800 million EGP. Work was completed on the first stage of development and increased productivity to 250 thousand tons of billet, and operational tests are being carried out to open it.
- Regarding the forges and victories for pipeline companies, a comprehensive study was carried out for the development of each one of them, by an international consultant RCG, and the same consultancy was hired to supervise the implementation of the proposed plan with financing. of the holding company. The first phase of the project is currently underway to ensure the possibility of increasing the concentration of crude oil
A consultant has been selected for Misr Aluminum Company’s cell expansion and modernization project, the cost of which is expected to reach £ 13 billion financed by a combination of loans and self-financing.
At the Holding Company for Chemical Industries, a new line is being built in a company to manufacture the necessary flanges for railway projects, and in 2020 the modernization project of the Kima company was completed at a cost of more than 11 billion pounds.
The Holding Company for Spinning and Weaving is witnessing the largest development project since the factories were established in the 1930s at a cost of more than 21 billion pounds.
– A contract is being signed with a major Chinese company to rehabilitate the Nasr Automobile Factory, allowing the production of an electric car with a capacity of 25,000 cars per shift.
