Qatar forms joint venture for Algeria steel plant

18 November 2012

Plant will be built in northeast of the country

Qatar International has set up a joint venture with two local companies to build a 5 million t/y steel plant in Bellara in the northeast. The site is about 40km from the port of Jijel.

Qatar International have a 49 per cent stake in the company, while the remaining 51 per cent is shared by state steel company Entreprise Nationale de Siderurgie (Groupe Sider) and Fonds national de l’investissement, a government investment fund.

The project will be carried out in two phases. The first phase, which will cost an estimated $2bn, will deliver 2m t/y of long steel capacity by 2017. The second phase, which will cost an estimated $1.2bn, will add facilities to produce flat steel and special steel.

A final investment decision is expected to be signed in December during the visit of the emir of Qatar, Hamad bin Khalifa al-Thani, to Algiers. Tenders for the lump-sum turnkey contract for the main phase, phase one package are due to be issued in early 2013. Technology providers are expected to team up with engineering, procurement and construction (EPC) contractors to submit bids for the scheme.

The project is central to Algeria’s ambitions to develop its downstream industry and create an alternative revenue stream to oil and gas, which account for 97 per cent of the country’s export income. It also wants to develop domestic steel production in order to replace costly imports on the world market. The country’s only existing production is from an ArcelorMittal plant at El Hadjar in the northeast, which has capacity of 2m tonnes a year (t/y) but produced just 440,000 t/y in 2011.

Several similar projects have been shelved in recent years: a steel plant proposed by Egypt’s Ezz Steel; a direct reduction iron facility proposed by Luxembourg-based ArcelorMittal; and an aluminium plant proposed by Emirates Aluminium of the UAE. Plans for a zinc mine and processing facility in Bejaia have also been on hold for the more than two years.

The Qatari company has already invested more than $400m in the project and is exploring the possibility of sourcing iron ore from mines near the Algeria/Mauritania border. Gas allocation for the project is understood to have been secured.

Qatar International is a joint venture of Qatar Steel and Qatar Mining. Qatar Steel is wholly owned by Industries Qatar, the downstream investment arm of Qatar Petroleum.

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