2025/01/27

South Valley Cement eyes plant reopening

South Valley Cement has announced its decision to reject a proposed settlement agreement presented by the Ministry of Justice's arbitration administration regarding the company's ongoing operational challenges.

The company has expressed its intention to resume factory operations through securing the necessary financing. This may involve a capital increase from existing shareholders, although the specific amount has yet to be finalized. The secured funds will be utilized for factory repairs and to provide the necessary operating capital.

Should the planned capital increase prove unsuccessful due to the par value exceeding the market value, South Valley Cement will explore alternative financing options, such as seeking an investor or obtaining a loan. This decision to resume operations follows a request from the Deputy Prime Minister and Minister of Industry.

Last July, South Valley Cement publicly denied rumours of a company or factory sale, emphasizing that no negotiations or commitments had been made to sell to any entity. The board of directors has reiterated its commitment to reaching a resolution with the government by the end of 2024. The company has stated that it will return to international arbitration if no resolution is found regarding issues related to gas cuts, the Industrial Development Authority, and development fees.

South Valley Cement reported losses of 237.49 million Egyptian pounds in the first nine months of 2024, a significant increase compared to the 63.1 million pounds in losses recorded during the same period in 2023. Despite these increased losses, cement sales surged to 1.1 billion pounds in 2024, a substantial increase from the 592.5 million pounds recorded in 2023.

In November, South Valley Cement issued a response to a letter from the General Authority for Industrial Development (GAID) that claimed the company had an outstanding debt of 1.246 billion Egyptian pounds. South Valley Cement refuted this claim, asserting that it does not owe any amounts to the GAID. The company cited a final and binding court ruling in its favour as evidence. Furthermore, South Valley Cement claimed that the GAID owes the company 160.3 million Egyptian pounds for a second license.