Author: Gavin Maguire
LITTLETON, Colorado (Reuters) – North Africa’s largest economy and second-largest producer has boosted production and exports of several highly energy-intensive products as part of efforts to boost growth in its industrial sector.
Egypt’s combined exports of cement, fertilizers and chemicals doubled between 2022 and 2024 and grew by 350% from 2019 thanks to increased government support aimed at encouraging rapid industrial expansion.
The higher production in Egypt comes at a time when production of the same products has been reduced in Europe and highlights the growing trend of re-locating the chimney sector away from high energy cost locations and pollution controlled areas.
Increased production in Egypt’s heavy industry – which also includes refining and natural gas processing – has helped create valuable private sector jobs in the country of 112 million.
But the climate impact of the surge in production of such energy-intensive and highly polluting products remains an important unknown, due to relatively lax reporting standards compared to parts of Europe, North America and Asia.
EXPORT BOOM
Egypt’s exports of cement and clinker – a raw material used in cement production – were 9.7 million metric tons in 2024, a record nearly three times the amount shipped in 2022, according to ship tracking data from Kpler.
Fertilizer exports from Egypt also hit a record in 2024, showing a 70% jump from 2022 to 8.3 million tons.
Egypt’s cement and fertilizer sector production figures for 2024 have yet to be released, but in 2023 the country ranked 11th in the world with cement production of around 50 million tonnes, according to the World Cement Association. Egypt ranked sixth in nitrogen fertilizer production (3.5 million tons) in 2023, according to the International Fertilizer Industry Association.
The Egyptian government has identified both the cement and fertilizer sectors as key drivers of economic growth.
To support their continued expansion, they and other industrial sectors are assigned fixed prices for their natural gas supply, which helps them control costs.
Major government infrastructure projects are also expected to boost local demand for cement, while the government recently scrapped subsidized local fertilizer prices to help boost margins for fertilizer producers.
The government also helps sponsor trade missions to several fast-growing regional markets to encourage further sales of its industrial products.
BLIND SPOTS
Due to the limited sharing of information between power plants, utilities and heavy industry, it is unclear how much emissions there are from this expansion of Egyptian industrial production.
However, the International Energy Agency estimates that about 0.8 to 0.9 tons of carbon dioxide (CO2) are released for every ton of cement produced and about 2.6 tons of CO2 for every ton of nitrogen fertilizer produced.
As a result, Egypt’s vast total industrial production of goods is likely to cause significant pollution impacts.
In 2023, Egypt emitted 279 million tons of CO2 from energy production and industrial processes, according to the Energy Institute, the most among North African countries and the 25th largest in the world.
However, the emissions picture is complicated by production changes underway among international cement and fertilizer producers who are trying to increase plant efficiency levels and reduce overall emissions.
Recent developments within the footprint of international operations Heidelberg (ETR:) The materials are an example.
Germany’s biggest cement maker halted cement production at its Hanover plant in 2024 due to weak local sales, but at the same time upgraded its Helwan cement plant near Cairo.
These moves allowed Heidelberg to better align production levels within key markets, by reducing production in shrinking markets while expanding production in growth areas.
However, the manufacturing changes have also led the company to accusations of moving high-polluting operations outside the eurozone – where emissions standards are becoming stricter – to areas where pollution standards are potentially more relaxed.
The actual resulting emissions effect of these changes has yet to be released, but data on Heidelberg’s overall emissions footprint shows that the company has steadily reduced its CO2 emissions, from around 73 million tonnes in 2019 to 63.2 million tonnes in 2023, according to LSEG- in.
And upgrades to the Helwan plant in Heidelberg include a new waste heat recovery system that is expected to reduce both energy consumption and emission levels.
Of course, Heidelberg is only one of many cement producers operating in Egypt, and other companies may have different emission and efficiency standards.
But the dynamic changes underway in Egypt’s industrial landscape highlight an important new climate risk arising from the rapidly expanding scale of industrial production in North Africa, even as the weight of the same sectors is declining elsewhere.
The opinions expressed here are those of the author, a market analyst for Reuters.
