GYPSUM : The pearl of the Sinai peninsula and how the success story between Egyptians, Greeks and Germans was developed.

By : Minas KatanopoulosEconomistPresident/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.Ş. - Turkey / Τουρκία

SEV-Athens, 17/10/2014

January 2013 1

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.

January 2013 2

Knauf Egypt : From 1998 to today

Knauf Egypt’s 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.

January 2013 3

Knauf Egypt : From 1998 to today

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

Start End

Planning - Building Aug 11 Oct 11

- Plants Dec 10 Jul 12

Building Permit Nov 11 Nov 11

Tender for Construction Aug 10 May 11

Sep 11 Nov 11

Earth Work Oct 11 Nov 11

Construction Work Oct 11 Jun 13

Ordering Dec 10 Oct 13

Delivery Jun 12 Dec 12

Installation of Steel Construction Jun 12 Apr 13

Installation Mechanical Equipment Oct 12 Jul 13

Installation Electrical Equipment Jan 13 Jul 13

Hardware Tests May 13 Aug 13

Commissioning Jun 13 Okt 13

Start of Production Okt 13 Okt 13

Timetable

3 3324 25 26 2714 15 16 17 18

2010

9 10

Jul 1

3A

ug 1

3S

ep 1

3O

ct13

Nov

13

Dec

13

Jan

13Fe

b 13

Mar

13

Apr

13

May

13

Jun

13

Sep

11

Oct

11

Nov

11

1 2

2013Year

Project Month

2011 2012

39 40 4134 35 36 37 3829 30 31 32

Inspection of Dismantling Bilkent Plant

Jul 1

1A

ug 1

1

Feb

11

Feb

12

Nov

12

Dec

12

2819 20 21 22 2311 12 134 5 6 7 8

Oct

12

Jul 1

2

Jan

12

Mar

11

Apr

11

May

11

Jun

11

Dec

11

May

12

Jun

12

Mar

12

Apr

12

Aug

12

Sep

12

Aug

10

Sep

10

Oct

10

Nov

10

Dec

10

Jan

11

January 2013

Project Overview

4

Key Technical Figures:Capacity: Board Plant 15 milllion m²/a

Stucco bagged 46,000 t/aFiller 28,000 t/aRollforming Line 13 million m/a

Size of the Property: 133,200 m²

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

Project: Suez, Plaster Board Plant, Mixing Plant, Rollforming Line for Profiles

Arab Republic of Egypt

Knauf Suez PlantIndustrial Zone, Ataqa

January 2013 5

Actual Status on Site

January 2013 6

Location

80 km

35 km

125 km

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).

January 2013 7

The company’s 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 tomorrow’s requirements.

Knauf Egypt’s 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.

Knauf Egypt : Vision & mission

January 2013 8

The success platform

This saying is not from a Greek but from a German philosopher (triangle of Georg Wilhelm Friedrich Hegel).

What we have learned so far and would like to share

January 2013 9

 • 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.

Positive environment for business investments

January 2013 10

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.

Local Risks & problems we are still facing

January 2013 11

Let‘s 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.

January 2013 12

Many

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