GYPSUM : The pearl of the Sinai peninsula and how the

success story between Egyptians, Greeks and Germans

was developed.

By : Minas Katanopoulos
Economist
President/Board member:
Knauf A.B.E.E. - Greece
Sakret Zeipekkis Ltd. - Cyprus
Knauf Ltd. & Partner - Egypt
Knauf LLC & Knauf RAK FZE - UAE
Knauf East Africa Kenya & Tanzania
KNAUF and PFT A.. - Turkey /

SEV-Athens, 17/10/2014
 Knauf Egypt : From 1998 to today

Knauf Egypt started, with the support of Knauf Greece, as a Representative Office
in 1998 to establish a chain of distribution and to provide distributers, consultants
and contractors with the necessary technical assistance.

In 2003 Knauf established its limited liability company in Egypt, which included
large storage facilities enabling Knauf to familiarize the Egyptian market with its
complete building systems and quality products, used for dry wall construction.
This successfully resulted to a wider clientele network.

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 Knauf Egypt : From 1998 to today

Knauf Egypts strategy broadened in 2010, by

building a plasterboard and gypsum plaster factory
in the Ataqa Industrial Zone in Suez. The company
also developed a gypsum mine in the Sinai
peninsula. The total investment reached
approximately 50 million USD totally self financed.
The factory in Suez was built using almost
exclusively German equipment and its production
process conforms to German standards, whereas
its production process creates no waste water or
flue gases.

It is obvious that the recent political instability

affected the time planning of the erection, but
nowdays we are happy and proud to notice that the
Knauf plasterboard plant in Suez started production
since end of August 2014.

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 Knauf Egypt : From 1998 to today

The plant was initially scheduled to start production on July 19 th, 2012, but as
mentioned before, the start was postponed, nevertheless not stopping Knauf
from overcoming all obstacles.

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Project Overview
Arab Republic of Egypt

Knauf Suez Plant

Industrial Zone, Ataqa

Project: Suez, Plaster Board Plant, Mixing Plant,

Rollforming Line for Profiles

Key Technical Figures:

Capacity: Board Plant 15 milllion m/a
Stucco bagged 46,000 t/a
Filler 28,000 t/a
Rollforming Line 13 million m/a

Size of the Property: 133,200 m

Key Financial Figures:

Amount Invested: USD 50 million

Time planning :
Start of Project: Dec 2010
Start of Construction Activities: Oct 2011

Commissioning: August-October 2014

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Actual Status on Site

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 Location
Location of plant, quarry and major local markets

The Suez location was selected due to its industrial zone, distance to
the raw material and major local and export markets (Comesa treaty
among the neighbouring countries).

125 km

35 km

80 km

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 Knauf Egypt : Vision & mission
The companys objectives are to produce Egyptian products
according to European Standards with competitive prices,
employ Egyptian manpower, provide applicators with
vocational training in drywall systems installation, introducing
sustainable products that are environmentally friendly and to
organize seminars to present innovations in drywall systems
to meet tomorrows requirements.

Knauf Egypts vision is committing to provide the Egyptian

and neighbouring markets with high quality products
according to the European Standards and aims to keep its
large share in the drywall systems.

All activities have always been supported by Greek people

(Mr. Sigalas-Managing Director, Mr.Katanopoulos-President).

The creation of the plant facilities in conjunction with the

commitment and company vision, has not been an extremely
simple birth. In certain cases, lack of cooperation between
Government Authorities, delayed some progress steps and
also affected our market presence.
However, Al Hamdulillah, we completed the investment and
began production, but still-due to bureaucracy-with no
operation lisence.
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 What we have learned so far
and would like to share

The success
platform

This saying is not from a Greek but from a German

philosopher (triangle of Georg Wilhelm Friedrich
Hegel).
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 Positive environment for business investments

Egypt has a balanced, conservative and traditional business trade and tax regulations
environment which is being rapidly improved, facilitated, and modernized according to the
European standards and investors expectations.
Banking regulations and restrictions are almost acceptable (some issues still have to be
improved), moderate rules and conditions are existing for transaction in foreign and local
currency, inflation rate and foreign currency changes are not catastrophic as opposed to
other countries, whereas existence and application of agreements to avoid double taxation
with Germany, Greece and other countries, proves that Egypt is well aware of the needs of
foreign investors.
Changes in the infrastructure, security and energy availability present recently a steady
improvement. In Egypt you feel safe and secure. Investors can find personnel with adequate
qualification.
Certainly there are many topics to be improved. Some of the constrains are being listed in
the cons section. But it also should be mentioned that the ministries and public institutes
like IDA, GAFI etc. have big understanding and knowledge of the existing bureaucracy in
several cases and assist the investors (in our case connection to the network or pipe line of
Gas, electricity, or obtaining visas for foreign personnel etc.)
Though we survived major political and presidential changes, we have been able to
complete our investment, with some delay. The understanding of our problems in this
respect by the local, central and decentralized authorities was always there, may be
sometimes not at the extend we wished to have it.
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 Local Risks & problems we are still facing

1. Foreign industrial companies established in Egypt, are not allowed to import merchandises
for trading purposes and sell them as trading goods locally. This created a major obstacle
towards launching the Knauf products to the Egyptian market.
2. Even after changing the basic activity from trade to industry (production), once again we are
not allowed to import and co-sell trading goods, which are part of the Knauf building systems
(eg. screws import)
3. Difficulties in obtaining working permits for experienced foreign personnel.
4. Lack of one-key high-level contact person within the Authorities who should have the
authority to support investment projects in Egypt. Such an authority would be highly
appreciated in order to avoid delays.
5. Shareholder loan from abroad is not possible nor attractive. Such obstacles tend to promote
financing through local banks , which is rather expensive.
6. Major difficulties in quarry possesion for foreigners in Sinai. Though we are producers of
gypsum products, we are not allowed to become direct owners on quarries or quarry
lisences. As in the case of the imported trading goods mentioned above, we once again
need to proceed with indirect purchasing procedures.
7. Limited understanding in the completion of the requested documents, when building and
operation lisences have to be obtained.

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 Lets make the long story short

Egypt is a promising country. Egypt deserves foreign investments. Foreign

investments will make money.
The investment status can be improved by making use of past experience
(lessons learned) from experienced investors. In this direction, our contact
persons in Egypt, are always available to cooperate.
Emmanuel Sigalas: Hamdy Shabrawe
General Manager, Knauf Ltd & Partner Egypt Plant Manager
Mobile: +20 (100) 120 6789 Mobile: +20 (100) 999 0769
Address: 6A road 23, 3rd floor New Maadi, Cairo Egypt
Telephone: +202 23 59 55 44

On the 24th of October, his Excellency, the Prime Minister of Egypt, will pay a visit to
the South Sinai Governate and will visit several industries in the Industrial Zone in
Ataqa. He is expected to honour us by visiting our plant. However, the official
opening ceremony of our plant will take place towards the end of the year, as still
some environmental works have to be completed, in order to create the requested
by our Group green areas arround and in the plant. Your presence will be an
honour to us.
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 Many

thanks

attention!

for
your

January 2013 12