China’s Xinfeng Steel is doubling down on Egypt — or sextupling down to be more precise. The company is now planning a massive USD 10 bn integrated industrial complex in the Suez Canal Economic Zone, up 6x from an initial USD 1.7 bn price tag mentioned in April when the project started construction, according to an Industry Ministry statement.

Ten seems to be the magic number for the project, with the project set to span 10 mn square meters and have an annual production capacity of 10 mn tons of varying types of steel. The project is also expected to create 100k jobs, 15k of which will be direct jobs.

Why it matters: Outside of the enormous size of the investment ticket, what really stands out here is the intent to produce not just rebar and wire rod but high-value finished products and specialized types of steel that Egypt doesn’t currently produce at scale. This is a W for localization efforts and a large financial commitment to support Egypt climb its way up the manufacturing value-add food chain.

Included in the list of products to be produced are key targets in the automotive localization drive, with vehicle components like automotive steel sheets, specialized automotive alloys, brake disc component, and brake drums being listed. If Egypt is going to successfully persuade car manufacturers to actually manufacture their vehicles here and not just assemble them, this is exactly the type of project we need to make this a reality.

Our existing shipbuilding industry should also see maritime plates from the factory enter the local market, which has historically been weighed down financially — and also slowed down — by the cost of imported maritime-grade steel. One likely offtaker is the Chinese state-owned China State Shipbuilding Corporation, which is eyeing a series of shipbuilding and shipyard projects, according to reporting from EnterpriseAM last month.

The production of seamless pipes for the oil and gas sector and specialized structures for solar power plants is also planned, again two sectors that have ranked high in the localization push. Also listed are standard fasteners, home appliance components, heavy duty steel frames for factories, and more.

Localization is also the name of the game here when it comes to inputs, with the two factories committing to sourcing iron ore locally, according to Industry Minister Kamel El Wazir. He also laid out the need for the project to “expand their reliance on solar energy and clean energy sources,” mirroring comments earlier this week where he laid out that large energy-intensive projects will only the get the Supreme Council of Energy’s sign-off they source a large portion of their power needs from renewable sources.

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