The Egyptian Transport Ministry is in advanced talks with China State Shipbuilding Corporation (CSSC) for a series of shipbuilding and shipyard projects, a senior government source told EnterpriseAM. The talks, which also include a consortium of other Chinese maritime giants, have yet to land on a final price tag or financing structure. The official suggested they could wrap up as early as the first half of the new year.

Talks include the modernization and expansion of the Damietta Shipyard — which currently produces some 60% of Egypt’s fishing vessels — alongside state-owned shipyards in Port Said and Port Tawfik. A Chinese delegation has already completed site visits, and a preliminary agreement is reportedly close to being finalized, we were told.

We see this as a play for vertical integration and a natural play on the recent expansion of the domestic steel industry. By localizing the steel-heavy shipbuilding industry with a partner as large as CSSC (the world’s largest shipbuilder), Egypt could move from exporting raw marine-grade steel to using it in high-value manufacturing.

The move also supports the Sisi administration’s bid to see the national merchant fleet grow to 150 vessels by 2030, up from its previous 36-vessel target. The goal is for at least 100 of these vessels to compete in international maritime transport, reducing Egypt’s reliance on foreign shipping lines for strategic commodities like wheat and fuel.

It also ties in with a USD 2 bn project to shift the canal from serving as a toll road toa service station pit stop, which two government sources told EnterpriseAM about last month. To prepare for and accelerate the return of Suez Canal traffic, fixed and floating bunkering stations to refuel vessels of all sizes will be developed, along with new maintenance, logistics, and crew-support services, we were told.

Sound smart…

CSSC is a state-owned juggernaut and the world’s largest shipbuilding conglomerate, controlling as much as 23% of the global orderbook. It finalized a massive USD 16 bn merger with its sister company, CSIC, this year in a bid to consolidate its lead over regional rivals.

CSSC dominates the market in tonnage and volume, building everything from naval destroyers to ultra-large container ships. It’s now targeting market share previously held by South Korean giants like HD Hyundai and Samsung Heavy Industries at the “high-value” end of the industry, where the two South Korean giants have traditionally led in technologically complex, high-margin vessels like LNG carriers.

Want to dive deeper? Watch Bloomberg’s How China came to dominate globalshipbuilding (watch, runtime: 10:38).

Tags: