Monday, 5 March 2012

Qatar to invest in Algerian steel complex

Industries Qatar is to invest $411 million in constructing a steel plant in Algeria, the company announced during its presentation of its financial results for 2011. The joint venture project, named Qatar Steel International, was announced by Mohamed Ben Salah Al-Sada, the Qatari energy and industry minister, who did not name the location of the factory; it is believed to be the Bellara industrial zone in Jijel.

Tender documents for the completion of feasibility studies are being prepared. Qatar Industries plans to take a 24% stake in the venture, while the Algerian press is speculating that another Qatari group, Qatar Mining , may also become a potential partner in the project, bringing the Qatari stake to 49%, the maximum possible level of foreign ownership as stipulated by the Algerian 49-51 investment law. After first mentioning the project last October without naming the foreign partner, Algerian industry minister Mohamed Benmeradi later elaborated that there were “several partners with whom we have signed a memorandum of understanding”.

The factory, which is to be 70% loan-financed, will begin operating in 2016 and will reach eventual production of 4.8 million tonnes a year. In its first phase, production will reach 2.5 million tonnes, rising to nearer 5 million tonnes in the second phase. The factory will produce steel primarily aimed at supporting and developing Algeria's railway industry. Algeria imports $10 million in steel products each year, equivalent to 20% of its total import bill, according to the industry ministry. Agreement was reached last September to extend the contract for the El Hadjar steel plant in Annaba, operated by the Algerian subsidiary of ArcelorMittal , which plans to increase production to 1.5 million tonnes in the next 18 months. Reports emerged last month that the complex was in financial difficulty, having failed to secure a loan from Algerian banks, but this was denied by parent company ArcelorMittal. The Algerian authorities have committed to supporting the plant come what may.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2012 Menas Associates

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