A subsidiary of Ezz Steel, Egypt's largest steel producer, has been granted a new licence for the production of Direct Reduced Iron (DRI), also known as sponge iron, the company stated on Sunday.
The licence was awarded to Ezz Rolling Mills, which is 99 per cent owned by Ezz Steel, after it met the required qualifications.
Ezz Steel had previously been granted a licence for producing the steel billet ore in 2008, but it was withdrawn following an Egyptian court verdict in 2011 on graft charges related to the illegal sale of steel licences.
The court ordered the withdrawal of two licences from Ezz Steel, in addition to sentencing its ex-chairman Ahmed Ezz and former Industrial Development Authority (IDA) head Amr Assal to 10 years in jail, with a LE660 million fine to be paid between them.
The new licence relates only to Ezz Steel’s new expansion and not to Ezz Steel’s current production, which continues to operate normally.
Ezz Steel’s subsidiary received the licence on Wednesday after a down payment of 15 per cent of a total LE330 million ($54.1 million), which will be paid over five years.
In October, Ezz Steel reported a 16 per cent drop in net profits for the second quarter, as the company grappled with persistent economic weakness since last year's popular uprising.
Net income for the three-month period (April, May and June) was LE142.43 million ($23.34 million), down from LE168.64 million a year earlier, according to a stock exchange filing.
This article was amended on 19 November to correct an error.