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Egypt’s MEC seeks renewal of coking coal production license

Image used for illustrative purpose. Coal is unloaded onto large piles at the Ulan Coal mines near the central New South Wales rural town of Mudgee in Australia, March 8, 2018.
Reuters Images/David Gray

The plant in Suez Governorate has stopped production since June 2022

Egypt’s Middle East Carbon (MEC), a leading manufacturer of coking coal in the Middle East and Africa (MEA) region, has called upon the Suez Governorate authorities to renew the production license of its existing plant in the Governorate.

Company chairman Walid Abu Raya said the plant had obtained clearance from General Authority for Investments (GAFI), but the governorate didn’t renew the production license, forcing the company to stop production from July 2022.

Raya said the plant constitutes a key source of foreign exchange for Egypt since it is required to export a minimum 50 percent of its production.

Before closure, the plant exported 80,000 tonnes out of its total production of 140,000 tonnes, mainly to Bahrain Steel Company in Bahrain; Emirates Steel in the UAE, Kuwait Steel in Kuwait; Sohar Steel and Jindal Steel in Oman; Al Rajhi Steel and SABIC in Saudi Arabia, and El Fouladh in Tunisia.

Raya said the company was unable to honour some of its existing contracts in Saudi Arabia, Kuwait, Bahrain and Oman due to stoppage of production.

Moreover, a recent coal shipment destined for the plant couldn’t be offloaded despite environment ministry’s clearance due to production stoppage.

The delays had cost the company $241,000 in fines at the rate of $7,000/day, which Raya underlined as a ‘loss of valuable foreign exchange” for the country.

“The plant would receive 5,000 tonnes of coal every two weeks,” he said.

The stoppage also forced the company shelve its plans to grow annual exports to $50 million from $20 million by the end of 2022 by taking advantage of the exit of Russian coking coal from regional markets due to the Russia-Ukraine war, and related sanctions.

Raya said closure of the plant forced the company to decline new contracts, adding that the Suez plant met 40 percent of the coking coal requirements of domestic steel plants.

“If we had to move and re-establish the factory, it will cost the company about one billion pounds. It is also difficult to obtain land in the area,” he said.

The company had to cancel its plan to build a new 2-billion-Egyptian-pound ($104 million) coal complex in SCZONE because of the Suez plant licensing issue.

Raya said he has appealed to GAFI, the Cabinet, and the Investment Disputes Settlement Committee to reconsider the non-renewal of production license.