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Interview: Karim Salama, CEO of MELC-Group

Karim provides a market overview of the Egyptian coal market, the challenges it faces and tips to overcome them.





How much can Egypt’s coal imports grow before its supply chain infrastructure reaches full capacity?

 
During the year 2015, Egypt’s imports of solid fuel reached slightly more than 1 million tons. This is expected to surge by 300% in 2016 due to cement factories diversifying to coal fuel. We don’t expect to reach full capacity in coal supply infrastructure before the year 2020.

What are the biggest inland and coastal bottlenecks for coal supply in the Middle East region and how easily can these be overcome?

Expansion of infrastructure capacity is more important than improvements in efficiency or utilization rates of railways, roads & seaports.
 
There is a sharp contrast in capacity expansion which lies in the organizational structure of railways and ports. As the regional governments are the regulator and monopoly operator of the railway network, a lack of competition has led to insufficient investment in coal rail lines thus far. The coastal ports sector on the other hand has opened up to competition which has resulted in investments in port facilities and a boom in seaport building.
 
Investments must be directed towards establishing coal handling terminals with adequate storage facilities using the best available technology to mitigate the various harmful effects of coal, extending more dedicated coal rail lines to consumption centers, and an extensive road network must be laid to facilitate the hinterland logistics thus keeping pace with regional coal import demand.
 
How much coal do you estimate Egypt to be importing in 5 years’ time (by 2020)?

In an ideal scenario, Egypt would rely on Coal to meet 100% of energy needed by its cement factories by 2020,  and the anticipated thermal power plants, thus the forecast is that solid fuel coal imports will reach 15 million tons per year by the year 2020.

How much coal are Egypt’s importers buying on a contract basis vs spot market and do you see this changing as demand increases?

About 80 % of the coal imports in Egypt are being bought on contract basis directly by the factories because current prevailing regulations limit coal trading. However we anticipate an increase in contractual buying once the coal-fired power generation plants are built and functional, as has been encouraged by the Egyptian government to overcome the current shortage in power production.

Which question or industry issue are you most interested to hear discussed at this year’s conference in Dubai?
 
Specialized coal-handling port terminals, and best available clean technology for reducing CO2 emissions when handling the coal supply chain.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.