Asec to hike Algeria’s cement production

30 December 2007
Egypt’s Asec Cement Holding (ACH) is set to almost triple the production capacity of Algeria’s state-owned Zahana Cement Company after signing a deal to take control of the company.

ACH has agreed a Eur 32.6 million ($47.5 million) deal to take a 35 per cent stake in Zahana, along with management control of the company.

Under the terms of the acquisition, ACH will increase Zahana’s production capacity to 1.8 million tonnes a year (t/y) from 675,000 t/y. It will also invest in in-house and overseas training for Zahana’s existing workforce.

ACH will spend $77 million on the plant upgrade, which is set to begin in July 2008. The upgrade will include the installation of new filters to bring emissions in line with international standards.

“We are highly optimistic about our operations in Algeria,” says Ahmad Khalifa, managing director of ACH. “The boom in the Algerian economy has made it an attractive and promising market for us. The under-utilised capacity of Zahana Cement Company presents an ideal opportunity for ACH.”

The Zahana plant, which is operating at less than two-thirds of its nominal 1.1 million-t/y capacity, is located 40 kilometres from Wahran in the west of Algeria.

The shares were sold to ACH by Algerian public-sector holding company Western Group ERCO. Algiers has committed to sell the remaining 65 per cent of Zahana in the next three to five years.
In the first half of 2008, ACH subsidiary Asec Algeria will begin construction of a 3 million-t/y cement facility in the Djelfa region of central Algeria.

The company also has interests in Sudan and Kurdistan, and is looking to enter the Libyan market. ACH plans to reach total production capacity of 18.5 MTA by 2011.

The Zahana deal was signed during a visit of Egypt’s investment minister Mahmoud Mohieldin to Algeria, which concluded on 25 December.

During his, Mohieldin and Hamid Temmar, his Algerian counterpart, signed a deal to create an Algerian-Egyptian Investment Company.

Algerian energy minister Chakib Khelil will announce the company’s first joint investment project on 16 January, according to a statement by Yamani Felfela, co-chairman of the Algerian-Egyptian Business Council, quoted on Algeria’s official press agency Algerie Presse service.

The company will have start-up capital of $1 million. A further 25 Egyptian investment projects in the telecommunications, cement, fertiliser, insurance and tourism sectors were also discussed during the visit.

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