Case Study: the Egyptian blue economy
Photo Credit: Suez Canal Economic Zone (SCZONE).
Having acted as host for COP27, Egypt is increasingly leading conversations on progressing the blue economy in the region. This active role in developing a regional blue economy and sustainable policies throughout the Egyptian maritime industry will likely pave the way for further marine development in North Africa.
As a key partner of the European Union, Egypt has had a long-standing involvement in the European maritime industry. Egypt only just launched phase two of the EU-funded SwitchMed Project in May to accelerate the implementation of Sustainable Consumption and Production (SCP). The project will also promote an Egyptian circular economy and a blue economic model.
It showcases just one of a series of initiatives and investments that have occurred this year in the Egyptian maritime industry by numerous stakeholders. This form of implementation is in line with the European Commission’s definition of ‘blue economy’ which defines it as "all economic activities related to oceans, seas, and coasts. It covers a wide range of interlinked established and emerging sectors."
Strategic Location
In mid-March, Hutchison Ports announced that they would be investing $700 million in Ain Sokhna Port, a major port in Egypt, and B100, a new container terminal in the Port of Alexandria. The investment includes the development of a new container terminal in Ain Sokhna Port with a capacity of 1.7 million TEUs which will be operated by an industry consortium (Hutchison, Cosco Shipping and CMA CGM) for 30 years. The development of these ports and terminals will most likely require dredging work.
The new terminal in Ain Sokhna Port will be south of the Suez Canal entrance, and its proximity to the northwest of the Suez Canal Economic Zone will allow the consortium to benefit from crucial trade routes in the region. Trade in the region will be further enhanced through the addition of a new container in the Port of Alexandria, one of the largest ports in the Mediterranean.
The investment brings Hutchison Ports’ total investment in Egypt to over $1.5 billion, establishing a significant contribution towards Egypt’s blue economy. The port operator group has pledged to commit to setting science-based targets to reach net zero by 2050 with guidance from the Science Based Targets initiative. They will set both near-term and net-zero targets, ensuring the development of this net-zero roadmap also takes into account past emission patterns. This, combined with their future plans for electrification of the fleet and the adoption of renewable energy and alternative fuels, will allow Hutchison Ports to execute their decarbonisation strategy in line with global efforts to minimise rising temperatures by 1.5C. However, it is unclear at this time how these strategies will be taken into account for the Egyptian port development projects.
Expanding operations
AD Ports have also announced their plans to invest in the Egyptian maritime market. The port developer signed a concession agreement to develop and operate a multi-purpose port in Safaga.They have additionally signed two further agreements for the development of two cement terminals in Al Arish Port and West Port Said Port, and four Heads of Terms for ports located in Egypt’s Red Sea region and the Mediterranean Sea.
These agreements provide increased access to multipurpose terminals, cruise routes, and logistical capabilities at Ain Sokhna, Al Arish, Hurghada, Port Said, Sham El Sheikh, and Safaga — all of which will help boost Egypt’s maritime economy.
The 30-year concession agreement signed between AD Ports Group and the Red Sea Ports Authority will make Safaga Port the first internationally operated port in the Upper Egypt region. The terminal will be built over an area of approximately 810,000 m2, with a quay wall of up to 1,000 m, and will be operational in Q2 2025. Once constructed, the terminal will have the capacity to handle 5 million tonnes of dry bulk and general cargo, 1 million tonnes of liquid bulk, 450,000 TEUs of containerised cargo, and 50,000 CEUs of RoRo.
In contrast, the agreements for the development of two cement terminals were signed between AD Ports and the General Authority for the Suez Canal Economic Zone for 15 years. As per the agreements, AD Ports will construct silos with a storage capacity of up to 60,000 tonnes in Al Arish Port and 30,000 tonnes in West Port Said Port. Both terminals will be able to handle 1-1.5 million tonnes annually and are set to be operational in Q4 2023.
Building relations
The numerous port construction and development projects being carried out will help solidify Egypt's position as a trading partner. This will offer a gateway to alternative shipping routes and expand the opportunity for trade relations and maritime development between Egypt and North Africa.
The continent's abundance of solar, wind, and thermal energy makes the African continent a prime candidate for ushering in the global decarbonisation of maritime transport, per the IMO Conference on Low-Carbon Shipping in Africa. The conference, which occurred at the beginning of May, highlighted the role developing African ports and wind farms will play in assisting the continent to execute its role in maritime decarbonisation.
These projects to develop or upscale ports and wind farms will require multiple dredging tenders in the future, creating significant opportunities for the growth and development of an African blue economy. With governments increasingly answerable to their people and a growing demand for greener and sustainable operations, it is likely that maritime government contracts may begin to be more conscientious about hiring companies that demonstrate strong Environmental, Social and Governance (ESG) strategies. And in fact, this is already evidenced in Hutchison Ports winning the Ain Sokhna Port and Alexandria Port contracts in Egypt.
This rising awareness of a blue economic model indicates the direction of global maritime initiatives and development projects are likely to take in the future. The rise in discussions of this nature across 2023 indicates that this is becoming a regular occurrence, with the Intergovernmental Oceanographic Commission Africa member states convening in March to deliberate on the work plan for 2023-2025 to advance a sustainable blue economy in the region.
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