Country Report: Egypt

Egypt in Africa: a leader in modernity and capacity

Click on charts below to view a larger version

Bar chart displaying the distribution of paper machine widths comparing Egypt with other T&T machines in Africa.

Bar chart displaying the distribution of paper machine technical ages comparing Egypt with other T&T machines in Africa.

Bar chart displaying the distribution of paper machine annual production rates comparing Egypt with other T&T machines in Africa.

Bar chart displaying the distribution of paper cash cost to the reel comparing Egypt with other T&T machines in Africa.

Pareto chart of T&T production capacity for Africa. Note that two countries stand out with the highest production capacity: Egypt and South Africa.

Pie chart displaying the % of tissue machine dispersion by country. Note that more than one half of the machines in Africa (64%) are located in Egypt and South Africa.

Bubble chart comparing by-country production capacity to machine technical age with bubble size representing the number of machines making up the country production.

Map of Africa locating paper machine producing cities. Note: Integrated (squares) and paper-only (circles) mills are differentiated on the map.

Zoom map highlighting Egypt paper making cities.

Egypt’s modern mills

Egypt’s tissue industry has boomed despite low consumption. Today, capacity is at least three times demand and still growing, with export markets the target for most of the new supply

Egypt’s consumption of tissue is expected to be just 60,000 tons this year, representing per capita consumption of a mere 0.7 kg. There are a number of challenges to growth. GDP per capita is low ($5400, 135th place worldwide, according to US government statistics). Illiteracy is high and hygiene awareness is poor, especially in rural areas, according to local suppliers. In addition, social habits generally favour the use of water instead of toilet paper.

According to Nuqul Group, “Egypt’s economic environment provides affordable labour, energy and water as well as political stability. On the other hand labour efficiency, volatility in energy prices, bureaucracy and changes in regulation and laws provide challenges.” Multiple distribution channels exist (kiosks, haberdasheries, micro-size pharmacies and small groceries). In an area equivalent to 30% of Europe they sell tissue products worth 1.2% of Europe’s market.

Despite the low consumption, Egypt has a modern and apparently strong tissue industry, with eight mills running 13 machines and with annual capacity estimated at over 200,000 tons, which will rise by 30,000 tons in the first quarter of 2010.

The industry is remarkably modern. According to Lockwood-Post Directory, six of the 13 machines have been installed in the past five years, while at least two more have undergone substantial rebuilds. Another new machine is due next year. When it is running normally, some 80% of Egypt’s production will be on machines that have started since 2005.

Three companies dominate the industry: Nuqul, with 75,000 tons of annual capacity on two machines; Pyramids (part of the Zeritis Group) with about 60,000 tons on four machines; and Interstate, which has only 30,000 tons on a single new machine today but is adding a second that will double capacity to 60,000 tons early next year.

Nuqul’s Second Mill

Nuqul Group (NG) is the leading company in Egypt and throughout the Middle East. With its headquarters in Amman, Jordan, it has branch offices and manufacturing plants in Saudi Arabia, UAE, Kuwait, Palestine, Sudan, Iran, Morocco, Algeria, Lebanon, and Yemen as well as Egypt. Its broad manufacturing base and aggressive marketing strategy have enabled it to extend its operations to more than 40 markets. NG established its Egyptian subsidiary Al Bardi Paper Mill in 1989, starting with a state-of theart converting plant producing a wide range of products. This was followed in 1991 by the first tissue mill, which started as a 17,000 ton/yr facility. According to Magdi George, Chief Area Officer, Africa region, “this first machine was the seed in the so-called Nuqul Tissue business unit which today comprises four tissue mills, two in Jordan and two in Egypt, with a total capacity of 160,000 tons/yr”. Al-Sindian, which is located right next to Al Bardi, has the country’s largest tissue machine, a 5.5 m Metso Advantage DCT 200 that runs at up to 2000 m/min and is rated at 54,000 tons/yr of paper. Metso delivered the complete tissue machine, including an Advantage AirCap and ventilation equipment, an OptiFlo II TIS multi-layering headbox, as well as Advantage Run sheet transfer and stabilizing technology and an Advantage GlueTurn-Up system. Al Sindian Paper mill uses 100% virgin fibre. It has two main stock preparation lines, one each for long and short fibres. It has completely automated pulp handling equipments supplied by Sicma of Italy. The stock preparation is supplied by Andritz to feed the two-layer headbox. The machine has a slitter and a shaft puller in order to supply the converting lines with one ply jumbo rolls. The roll handling and wrapping is also supplied by Sicma. Water for the mill comes directly from the municipality as drinking water. The water is mainly from the Nile river. Effluent water from both mills is combined and treated at a mechanical treatment plant and the water is disposed properly at the city municipality system.

Cairo has the biggest share of the total tissue business (69%), while the Canal region is the smallest (Source: Nuqul Group). Egyptian market shares by tissue category, showing the importance of pocket packs.

“We have a cogeneration plant on site that burns natural gas in order to generate electricity for all the site. It feeds Al Sindian paper mill, Al Bardi Paper mill and the converting plant,” Hani Nuqul told Tissue World. The hot air from the turbine is used inside the hood at the machine in order dry the paper.

Al Sindian and Al Bardi paper mills share several resources together such as power, water, steam, management, man power, security, safety, transportation and administration.

Interstate For Export

There is a new face on the Egyptian scene, Interstate Paper Industries (IPI). Located in the private free zone of Sadat Industrial City, mid-way between Cairo and Alexandria, it started up its first machine in June and has another under construction and due for startup in July 2010. The Government of Egypt sponsored three such industrial cities (6th of October, 10th of Ramadan, and Sadat City), to attract the population away from Cairo in order to alleviate the city’s congestion and pollution. Basic infrastructure (roads, electricity, water, sewer collection and treatment, phones etc.) and services (residential housing, schools, commercial centres etc.) are provided by the developers. The scheme has been a success in attracting investment to the tissue sector. Though 70% of Egyptian consumption is in Cairo, all but one of the tissue mills in the country is on one of these free zones, ideal for the growing export industry. Only Alex Converta, with a 10,000 ton/yr mill in Alexandria, is outside these zones. Part of the Indevco Group, IPI is a newly authorized sister company of the Lebanonbased UTM. The company is designed to produce the same grade portfolio as UTM. It will aim to supply top-quality tissue rolls, thanks to state-of-the art machinery and equipment, including dual head box, that will help it achieve softness for facial tissues and bulk for toilet paper and other grades. IPI adopted the most advanced stock preparation technology, including a full deinking plant that provides the highest brightness for deinked grades. The aim is to deliver “the softest premium facial and toilet, customized prime grades, bright economy grades, best quality of 100% recycled grades, and best quality of blue towel and away-fromhome grades,” the company says. Moreover, IPI will be using as raw materials both virgin pulp and recycled paper purchased from all over the world. The yearly production capacity of 60,000 tons will consist of two high speed machines from A Celli with a deckle of 2.8 m and design speed of 1800 m/min. In addition, IPI will have about 20,000 m2 of warehousing for raw material and finished goods, and one administration building.

Interstate Paper’s PM1 at the new mill in Sadat Industrial City started up in June. A second similar machine is on order for start-up in July 2010. IPI paper reel.

It will serve tissue converting affiliate companies such as Sanita & Napco, and many other local and international tissue converters. The mill is actually designed to supply various grades of jumbo rolls to the Middle East, Europe and African markets to be converted into tissue paper products, which will further promote Egyptian exports. In fact, the exports to Europe will benefit from low backhaul rates.

Since the strategy of the mill was to repeat the success of UTM in Lebanon, a fully dedicated team from the latter moved to Egypt to install, erect, and remain as part of the staff. Ultimately, the mill will employ about 180 people with a wide variety of background, and it will operate on a four-team basis working in three 8.5 hours shifts.