Sailun unveils $285m tire expansion project in Egypt

Qingdao, China – Sailun Group has unveiled plans to invest $285 million (€242 million) to expand tire production capacity in Egypt, as part of efforts to “further improve overseas capacity layout.”

The project, to be developed by wholly owned subsidiary Shams El Sherouk Tyre Co., involves construction of capacity for 6 million semi-steel passenger car radial tires and 1.05 million all-steel truck & bus radial tires per year.

Total investment is set at $285.43 million, including $272.3 million in construction spending and $13.13 million in working capita, said Sailun in a 21 April stock exchange filingl.

To be constructed in 18 months, the facility will be located in Ataqa, Suez province, within the TEDA industrial zone of the Suez Canal Economic Zone, Sailun said.

The expansion builds on an existing project at the site, where Sailun is already constructing capacity for 3 million semi-steel and 600,000 all-steel radial tires annually.

Sailun initially broke ground on the Egyptian plant in September last year and has given a ‘2026 completion’ deadline for the first phase. (ERJ report)

In its latest filing, the group said the new investment is based on “international market demand” and its “globalisation strategy development needs,” with the project primarily targeting Egypt and neighbouring markets.

Noting Egypt’s “automotive industry development opportunities, market gap and surrounding regional demand potential,” Sailun said the project is designed to “match regional incremental market demand.”

Another key factor, said the group, is Egypt’s strategic location “at the intersection of Asia, Africa and Europe,” as well as the logistics advantages of the Suez Canal.

The location will help “optimise raw material procurement and logistics transportation paths” and “reduce costs and increase efficiency” across the supply chain, it added.

Once fully operational, the facility is expected to have annual capacity of 9 million PCR and 1.65 million TBR tires.

It forms part of Sailun’s wider global manufacturing network which includes production footprint in China, Vietnam, Cambodia, Mexico and Indonesia.

The project is expected to generate average annual revenue of $367.9 million and net profit of $61.5 million.

Sailun said the investment will enhance its ability to “obtain overseas market opportunities and meet continuously growing market demand.” 

The project remains subject to approvals from relevant Chinese authorities.