After a month-long dispute, the state-owned Egyptian Iron and Steel Company formally agreed on Monday to hand over four mining and quarrying sites to a new corporate entity despite vocal opposition from workers, according to a company statement.
The move comes after the company held a general assembly meeting on Monday against the wishes of the firm’s trade union committee and other worker representatives who had a pending lawsuit seeking to prevent the meeting from taking place.
The plan to break up the company sparked a dispute last month between the Metallurgical Industries Holding Company — which is owned by the Public Enterprise Ministry — and the trade union committee and former board members of the Egyptian Iron and Steel Company, who claimed that the move would rob the company of a key portion of its revenue.
Of the 32 steel producers in Egypt, Egyptian Iron and Steel is the only company that uses iron ore found in Egypt’s mines, whereas all other companies either import iron ore or purchase it from the Egyptian Iron and Steel Company to then manufacture the finished products. For this reason, the quarries and mines are a pivotal component of the company’s business model.
Mada Masr previously reported that the holding company informed the Egyptian Exchange last week that the company’s CEO and the rest of its board had resigned, leading the holding company to reform the board, appointing union members only to non-executive positions. The old company board had said that the general assembly meeting, where the move to break up parts of the company was finalized on Monday, and its agenda, was set without their consent.
The meeting was challenged in administrative court by the trade union committee and the president of General Syndicate of Metal Industries, Khaled al-Fiqi. Yet the attempt to stop the assembly was halted by an administrative court decision on Saturday to refer the case to the State Commissioners Authority.
According to a leading member of the company’s trade union committee, who spoke to Mada Masr on condition of anonymity, the chairperson of the board of directors met with the committee on Tuesday, “to reassure us about the fate of the company after separating out the quarries and mines and said that he intends to develop the company by exploiting untapped assets — most of it land — to provide the necessary liquidity for development.”
The committee member said that the union is scheduled to meet with Fiqi on Wednesday to discuss next steps and that the committee will likely appeal the decision to break up the company.
The Minister of Public Enterprise, Hisham Tawfiq, said that he intends to list the new corporate entity on the Egyptian stock exchange, according to Masrway.
The Egyptian Iron and Steel Company — which has been the subject of speculation that it may be marked for liquidation in recent months — has seen its net annual losses nearly halved in its most recent financial statement, falling from LE1.5 billion to LE887 million mainly through the sale of capital assets.
In a move that was framed at the time as a potential saving grace for the company, the Egyptian Iron and Steel Company transferred LE750 million in land assets and company shares to Banque Misr in June to settle US$59.6 million in outstanding debts owed to the bank over judicial disputes. Around $12 billion worth of the debt was waived entirely.
The General Union of Engineering, Metal and Electrical Workers sent an memo to the president, the prime minister and the National Security Agency protesting the plan put forth by the Metallurgical Industries Holding Company.
According to the memo, a copy of which Mada Masr has obtained, the Egyptian and Steel Company is worried that it will be “under the mercy of the company about to be created for crude ore” at a time when the former company was able to reduce its losses by 42 percent in the last fiscal year, due in large part to its development efforts and success in settling a big portion of its debts.
Once a symbol of industrialization and a source of security for workers that no longer exists, the Egyptian Iron and Steel Company has become burdened with debt and has often met less than 30 percent of its annual production targets. A moratorium on new hires has come with the company’s fall from grace, and employment is no longer guaranteed after a longstanding apprenticeship program.
During his term in office, Public Enterprise Minister Hisham Tawfiq has already presided over the liquidation of the National Cement Company and the Egyptian Shipping Company, while he has faced opposition when it was rumored that the Egypt Iron and Steel Company was also slated for closure.