Blumberg Grain to invest more in Egypt on storage sites, plant

Blumberg Grain will spend $150 million over the next two years to complete a grain storage project in Egypt, where it will also build a manufacturing plant and make the world’s largest wheat buyer a hub for its regional operations.

Last year, the U.S. company finished work on 100 high-tech storage sites to handle about a quarter of Egypt’s local crop, but a larger second phase of the project to build an additional 300 sites has stalled amid bureaucratic hurdles.

“Phase Two is in final negotiations with the Egyptian government. The Phase Two project is expected to get underway rapidly, in order to be ready for the 2019 harvest season,” David Blumberg, CEO of Blumberg Grain Middle East and Africa, said in an emailed response to questions from Reuters.

The country’s supply ministry could not immediately be reached for comment.

While Egypt is the world’s biggest wheat importer, it also loses a lot of its own crop. About 3.5 million tonnes of the crop is procured by the government each year and much of it is stored in dilapidated open-air sites -- known as “shounas” -- that offer little protection against weather, pests and theft.

A study by consulting firm KPMG estimated that the government would save $551 million per year from the Blumberg facilities by replacing the shounas.

The total storage area provided by the new sites will hit 2.7 million tonnes after completion of phase two, Blumberg said.

Egypt’s local harvest totalled about 3.5 million tonnes this year and its state buyer is targeting around 7 million additional tonnes from international markets during the current fiscal year that began in July to supply its massive bread subsidy programme.

Once Phase Two is agreed the company has plans to build a manufacturing plant to produce refrigeration equipment for use in Egypt and elsewhere in the Middle East, though it declined to specify the level of investment expected for the plant.

“With the development of the Phase Two Shouna Project, Blumberg Grain will commence the concurrent implementation of ... a manufacturing plant and export hub, in a proposed partnership with the army, to produce industrial refrigeration for Egypt and export across the Middle East and North Africa region,” Blumberg said.

The plant is due to be built in Egypt’s Suez Canal Economic Zone, on which the government has pinned hopes of building a re-export hub that will draw badly needed hard currency but which has so far struggled to secure foreign investors.