Egypt's turmoil forces Pegas to halt Cairo plant

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Czech Republic nonwovens producer Pegas Nonwovens SA announced it has suspended trial production at a new 60 million euro plant near Cairo, Egypt in the face of the country's mounting political turmoil.

The company, which completed the plant start up process last month, says it has suspended operations at the facility 35 kilometers from the Egyptian capital as a security precaution aimed at safeguarding its workforce.

"With respect to the escalating tensions in the country, the transport of workers to the production plant presented an unnecessary level of risk that we do not wish to undertake," said Pegas Nonwovens director František Řezáč, in a statement.

Resumption of production will depend on developments in the Egyptian crisis, he added. "We can only hope that the situation will stabilize in the near future and that the country will return to normal," said Řezáč.

In July this year, Pegas announced that it had successfully supplied the Egyptian facility's first output of some materials to customers.

The Pegas director stressed that the temporary shutdown of the new facility at the trials stage will not significantly affect this year's overall planned output. Phase one of the unit comprises a 20,000 metric ton per year production line, which was due to be commissioned by the end of this year.

Pegas Nonwovens, headquartered in Luxembourg and with two Czech plants at Znojmo and Bucovice, said that it will make a further announcement should the Egyptian closure be longer term and delay the planned commercial launch.

In 2011, prior to the construction of the new plant, Pegas announced it had taken out an insurance contract with the Czech state owned Export Guarantee and Insurance Corporation to cover risks related to the project. The policy includes cover of the investment against "the risk of transfer of returns, expropriation or politically motivated violent damage."

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