Sugar cane is loaded onto a trailer in Luxor, Egypt. Al Khaleej used to sell the bulk of its white sugar to Iraq but that market is now producing most of its white sugar locally. Image Credit: Bloomberg

Dubai: Dubai’s Al Khaleej Sugar Refinery has agreed to build a major agro-industrial complex to produce beet sugar under a deal signed with the Egyptian government, the world’s largest port-based sugar refinery said on Sunday.

The project, named Canal Sugar, will be located only about 200km from its market, Jamal Al Ghurair, managing director of the refinery, told an industry conference in Dubai.

Investment Minister Sahar Nasr said the project, with a cost of around $1 billion (Dh3.67 billion), would produce 900,000 tonnes of sugar annually, filling a supply gap in the market.

Ghurair said the sugar market was oversupplied and that sugar margins had to improve by moving production closer to markets.

Al Khaleej, which produced 1.8 million tonnes in 2017, used to sell the bulk of its white sugar to Iraq but that market is now producing most of its white sugar locally after the Babil-based Etihad sugar refinery came on-stream in 2015.

Increased Middle East refining capacity is shrinking export opportunities.

The key financial partner for Egypt’s Canal Sugar, located in Minya, is Al Ahly Capital Holding, the project’s chief executive, Islam Salem, told the conference. Al Ahly is the private equity arm of the National Bank of Egypt.

The project will extend over 77,000 hectares (190,000 acres) and be farmed with wheat and beet in winter, and corn in summer, Salem said.

Egypt expects to produce about 1 million tonnes of sugar from cane this season, which runs from January through May.

Egypt also produces about 1.3 million tonnes of sugar from sugar beet each year and consumes about 3 million tonnes annually.

It meets its supply shortfall with a mix of private and public sector imports.

Nasr said Egypt also hoped to eventually export sugar to African markets.

“This is the largest factory compound of its kind worldwide,” she said. “It is an integrated package of land reclamation, industry and storage.”