Egypt could receive up to $2 billion in Chinese investment in its aluminium sector as producers in the Gulf face major setbacks due to the Iran war.
Chinese industrial group Henan Zhongfu is in talks with the government about investing in a new factory in the Suez Canal Economic Zone in what would be a boost to the country's aluminium industry, the Egyptian government said on Saturday.
The plan was proposed to Prime Minister Mostafa Madbouly by the company's chairman during a recent visit to Egypt.
The factory would be based in East Port Said and cover a square kilometre of ground, according to the statement. It would manufacture aluminium sheets, battery components and materials used in the aviation, railway and automotive sectors. It is expected to create around 3,000 jobs.
This would be the latest in a wave of Chinese investment in Egypt's manufacturing sector. Companies have invested billions of dollars in factories across a range of sectors.
Egypt has, in recent years, made attracting foreign investment and increasing exports two of its key economic priorities.
Much of the investment in manufacturing has come through the Suez Canal Economic Zone, which is strategically located between Africa, Europe and Asia, and provides financial incentives to overseas companies.
The news comes as aluminium producers in the Gulf face uncertainty on the back of the US-Israeli war on Iran.
Disruption at the Strait of Hormuz has blocked exports from Gulf countries, which together account for almost 10 percent of global output.
Iranian missile and drone attacks caused significant damage to key factories in the United Arab Emirates and Bahrain, forcing them to shut down. Emirates Global Aluminium said repairs at its Al-Taweelah complex – one of the largest aluminium production sites in the world – could take up to one year to complete.
The closure of the strait has sent global aluminium prices soaring amid fears of protracted disruption in the critical chokepoint.
Prices reached four-year highs this week after peace talks between Iran and the US ended without an agreement and President Donald Trump announced a blockade on Iranian ports.