EAST PORT SAID - Once known as a graveyard for tanks, an Egyptian mudflat east of the Suez Canal is being reclaimed for what its backers hope will be a vast industrial zone producing goods for export and the domestic market.

The East Port Said Industrial Zone sits on the Mediterranean Sea, 7 km (4 miles) away from the city whose name it bears. It is one four such zones under construction along the Canal, a transit route for about 15% of global shipping traffic.

Egypt runs a large trade deficit and has struggled to develop an industrial base. Many of the industrial parks it has so far tried to create lie semi-vacant, partly because they are far from urban areas where workers live, economists say.

The new industrial zone's developers - private Egyptian companies plus the military-owned National Service Projects Organisation (NSPO) - are hoping its position near Port Said city and a new city being built to the east means it will succeed where other similar projects have faltered.

"In terms of location, in terms of facilities, that is the real advantage," said the zone's CEO Sameh Gabra.

Until recently the area was a waterlogged flatland notorious for bogging down military vehicles during the wars between Egypt and Israel, Gabra said. Israeli forces reached the Suez Canal in 1967 and stayed there until Egypt pushed them back in 1973.

Over the last four years the NSPO has packed down soil and removed ground water from an area covering eight million square metres, solidifying the ground enough to handle light and medium industries, Gabra said. Four phases totalling 16 million square metres (6.2 square miles) are due to be completed over 15 years.

Its first-phase target is to lure Egypt's automotive firms by setting up painting, printing and dashboard producing lines.

Its first factory, NERIC, which will make carriages for trains and metro lines, is due for completion by June 2023. Construction on other factories is expected to begin by late 2022, Gabra said.

(Reporting by Patrick Werr; Editing by Aidan Lewis and John Stonestreet)