Ezz Drops to Two-Year Low on Report Egypt Seeks $111 Million

Ezz Steel (ESRS) plunged to the lowest level in more than two years on a report the company will have to pay the Egyptian government 660 million Egyptian pounds ($111 million) to keep production licenses.

The shares of Egypt’s biggest publicly traded steel producer fell as much as 10 percent before trading 1.9 percent lower at 6.9 pounds at 11:24 a.m. in Cairo, the lowest intraday level since March 2009. That gave the company a market value of 3.75 billion pounds. The benchmark EGX 30 Index (EGX30) advanced 0.7 percent.

Ezz is one of four steel manufacturers that will be required to pay the government to avoid revocation of licenses the court determined were not awarded legally, Al Mal newspaper reported today, citing Trade and Industry Minister Mahmoud Eissa. Kamel Galal, Ezz’s head of investor relations, said today the company is negotiating with the government. The talks are private and have no set time-table, he said.

The company said yesterday it will finish building its first direct-reduced-iron plant after an Egyptian court revoked the license for the facility last week. The company said the ruling will have a direct impact on future growth and it is studying all legal options to counter it.