Reuters, Littleton, Colorado In an attempt to boost the expansion of its industrial sector, the largest economy in North Africa and the continent's second-largest producer of natural gas has increased the production and export of a number of commodities that require a lot of energy.


Egypt's combined cement, fertilizer, and chemical exports have climbed by 350% since 2019 and doubled between 2022 and 2024 as a result of greater government support meant to encourage rapid industrial expansion.


A growing tendency in the reshoring of smokestack sectors away from high energy-cost locales and countries with pollution regulations is highlighted by the higher output in Egypt, which has risen at the same time that production of the same commodities has fallen in Europe.

The increased production in Egypt's heavy industry, which also includes the processing of natural gas and the refinery of crude oil, has contributed to the creation of valuable private sector jobs in the nation of 112 million people.

However, because of very loose reporting regulations in comparison to regions of Europe, North America, and Asia, the climate impact of the dramatic increase in production of such energy-intensive and highly polluting items is still largely unclear.

BOOM IN EXPORTS

According to ship tracking data from Kpler, Egypt exported 9.7 million metric tons of cement and clinker, a raw material used in the making of cement, in 2024, a record figure that was almost three times greater than the amount shipped out in 2022.

In 2024, Egypt's fertilizer exports reached a record of 8.3 million tons, a 70% increase from 2022.

Although production figures for Egypt's cement and fertilizer industries for 2024 are not yet available, the World Cement Association reports that Egypt produced almost 50 million tons of cement in 2023, placing it 11th in the world. According to the International Fertilizer Industry, Egypt produced 3.5 million tons of nitrogen fertilizer in 2023, placing it sixth overall.

The Egyptian government has recognized the cement and fertilizer industries as major contributors to economic expansion.


They and other industrial sectors have been given set rates for their natural gas supplies, which help them keep costs under control and encourage their ongoing growth.

While the government recently removed local fertilizer price subsidies to help increase fertilizer manufacturers' profit margins, large government infrastructure projects are also expected to increase local demand for cement.

In an effort to boost sales of its industrial goods, the government is also supporting trade missions to a number of rapidly expanding regional markets.

BLIND SPOT

The emissions toll from this increase in Egyptian industrial output is unknown because power plants, utilities, and heavy industry do not share much information.

However, according to the International Energy Agency, for every ton of cement produced, about 0.8 to 0.9 tons of carbon dioxide (CO2) are released, and for every ton of nitrogen fertilizer produced, about 2.6 tons of CO2 are released.

Therefore, there will probably be a significant pollution fallout from Egypt's high industrial commodities output totals.

According to the Energy Institute, Egypt released 279 million tons of CO2 from industrial processes and energy generation in 2023, which was the highest amount among North African countries and the 25th largest worldwide.

Nevertheless, manufacturing modifications being made by multinational cement and fertilizer producers in an effort to increase plant efficiency and lower overall emissions confuse the emissions picture.

One example is the recent changes to Heidelberg (ETR:HDDG) Materials' global operating footprint.

Due to poor local sales, Germany's biggest cement manufacturer stopped producing cement at its Hanover plant in 2024. At the same time, it expanded its Helwan cement factory, which is located close to Cairo.


By lowering output in regions that were contracting and increasing production in areas that were expanding, Heidelberg was able to better synchronize production levels within important markets.

The corporation was accused of moving its high-polluting operations from the Eurozone, where emissions regulations are getting harsher, to regions with possibly laxer pollution requirements as a result of the manufacturing shifts.

Although the precise emissions impact of these changes has not yet been disclosed, LSEG reports that Heidelberg has gradually decreased its CO2 emissions, from about 73 million tons in 2019 to 63.2 million tons in 2023.

Additionally, a new waste heat recovery system has been added to Heidelberg's Helwan facility, which should lower energy consumption and discharge levels.

Naturally, Heidelberg is only one of several cement manufacturers operating in Egypt, and other companies can have differing efficiency and emissions requirements.

However, as the weight of those same sectors declines elsewhere, the dynamic changes taking place throughout Egypt's industrial landscape point to a significant new climate risk resulting from the fast expanding scale of industrial activity in North Africa.

The author, a Reuters market analyst, is the sole owner of the views presented here.