Ezz Steel gets one of its two licences back

Steel manufacturer "close" to having second production licence restored after two were withdrawn by court order last year.

Ezz Steel, Egypt's biggest publicly traded manufacturer of the metal, has regained one of two production licences withdrawn by court order last year and is in advanced talks to secure the second, the company said.
Ezz paid 50 million pounds upon signing Wednesday's agreement with the Industrial Development Authority (IDA) and will pay the government a further 330 million pounds in five equal annual instalments after an 18-month grace period, Kamel Galal, the company's head of investor relations, said. The licence is for Ezz Rolling Mills, a 99 per cent unit of Ezz Steel.
"The company has enough liquidity to pay this off so this is very positive for them," said Heba Sherif, an analyst at Prime Securities. "It brings down their cost per ton because it reduces their reliance on imported scrap metal."
An Egyptian court in September 2011 stripped Ezz of two direct-reduced iron and billet production licences on the grounds that they were not paid for when awarded by the government.
The court also sentenced the former chairman Ahmed Ezz, a prominent member of Hosni Mubarak's dissolved ruling party, to 10 years in jail for irregularities in obtaining the licences.
The company will now restart construction on a US$400 million direct-reduced iron and billet plant that is 80 per cent complete, Mr Galal said. The factory, which would produce steel from iron-ore instead of scrap metal, was set to boost the company's profit margins, he added.
Ezz was also close to completing talks with the IDA to regain a second billet licence for its Ezz Flat Steel unit, at the same cost, Mr Galal said.
The shares retreated 4.1 per cent to 9.19 pounds in Cairo trading yesterday, but are up 242 per cent from where they stood at the beginning of the calendar year.