Egypt’s Ministry of Public Business Sector will disburse a minimum of EGP 255,000 in reparations for each of the 2,500 workers at the recently liquidated Egyptian Iron and Steel Company.
On 12 January, citing chronic losses, the board of directors of the Egyptian Iron and Steel Company passed on a resolution liquidating the company and dividing it into two new companies.
The company has been one of the country's industrial icons since its establishment in 1954 and start of operations in the early 1960s.
The liquidation resolution stipulated the company will be divided into a company for iron and steel and another for mines and quarries.
The move lays the groundwork for private sector investments to play a role in the two new companies in the future in light of the state’s plan to make use of its loss-incurring assets and untapped opportunities, according to the ministry.
The company’s board said the decision was made as a result of the heavy losses that have been accumulating over the years, which hit EGP 9 billion, EGP 982.8 million of which were lost between July 2019 and June 2020.
The liquidation resolution triggered anger among workers, various MPs, as well as some in the business community in Egypt; all called on the government to reverse its decision.
On 17 January, the industrial committee at the House of Representatives said that the government's resolution to liquidate the company should be subject to careful studies and reviews of causes for losses.
Meanwhile, the Egyptian Trade Union Federation voiced last week its opposition to the resolution, calling on all concerned bodies to overturn it and form a national commission of experts to look into the step's ramifications.
The federation said it will address President Abdel-Fattah El-Sisi to "intervene and salvage the company."
The day after the resolution was passed, Egyptian Lawyer Samir Sabry initiated a court action to stop the liquidation decision.
According to the balance sheet of the company, which is listed in the Egyptian Exchange (EGX), the company’s total value of assets witnessed a modest increase from 2017 through 2021.
The value of assets slightly rose to around EGP 3 million in 2021, up from EGP 2.9 million in 2017, incurring a net loss worth EGP 274.4 million in 202,1 with a negative gross profit amounting to about EGP 215 million, according to EGX data.
In January 2020, Minister of Public Business Sector Hisham Tawfik told Ahram Online that the strategy to improve state-owned companies stipulates that companies will be liquidated if their losses exceed their capital.
The company’s registered capital is estimated at EGP 500 million.
The Egyptian Iron and Steel Company (HADISOLB), an affiliate of the Metallurgical Industries Company, is the major iron and steel production company operating in the public sector, with total investments estimated at EGP 650.7 million, according to the company’s data.
The company was founded in 1954 in the Helwan district in south Cairo, as per a decree issued by then-president Gamal Abdel-Nasser, and started operations in 1961.
It was founded as a joint stock venture with majority equity from the state as the first-ever iron industry complex in the Arab region.
The company specialises in the manufacturing of iron and steel products with the highest quality and lowest cost based on the needs of the local and global markets at a rate of up to 2.1 million metric tons, according to the company’s data.