Cairo – Mubasher: The Egyptian Ministry of Public Business Sector reviewed the attempts made to prop up the loss-making Egyptian and Iron Steel (Hadisolb) before the liquidation decision.
In 2014, the company’s parent, Metallurgical Industries Holding Co, hired the UK-based Tata Steel Consulting to set a plan for increasing the volume of output and the plan included the upgrade of Hadisolb’s mining operations and furnaces, the ministry said in a statement on Sunday.
The project was postponed until the end of 2017; hence, Tata Steel was asked to upgrade the 2014 plan.
The initial report, released in July 2018, showed that furnaces were damaged severely as a result of poor operation over the course of four years. The consultant was unable to determine the volume of damage and the methods of repair.
In the first quarter (Q1) of 2019, several international companies were invited to bid for the development and management of the company for 20 years with a funding not less than $100 million as well as other incentives. One offer was submitted for an engineering, procurement, and contracting (EPC) contract and not for a partnership contract as was requested.
In parallel with looking for a partner, the Metallurgical Industries Holding Co made internal structural reforms under the supervision by the Ministry of Public Business Sector such as settling the growing debts owed by Hadisolb which exceeded EGP 9 billion. A total of EGP 1.2 billion in debt has already been settled with Banque Misr and the Ministry of Petroleum.
The ministry affirmed that the rights of employees of the company are protected by the law during the liquidation process.
The company said that the liquidation decision will have no significant impact on the market as the company’s annual production of 112,000 tonnes is less than 1% of the volume of the market.
The consumption in Egypt reaches about 7-8 million tonnes annually with the production capacity amounting to 11.8 million tonnes per year. About 2 million tonnes are being imported less than the local price.
Earlier, the company’s shareholders approved a decision to liquidate its steel plant and spin off its mining operations.
The reason for liquidation is the rising losses incurred by the company and its inability to return to production.
During the first quarter (Q1) of fiscal year 2020/2021, Hadisolb incurred net losses of EGP 274.48 million, down from EGP 367.8 million in the year-ago period.