U-turn on foreign investment stalls progress at Beni Saf

14 September 2008
Dubai Aluminium (Dubal) and Abu Dhabi-based Mubadala are in talks with Algeria over the ownership structure for the Beni Saf aluminium smelter, following changes to the country’s investment law.

Construction on the project, valued at more than $5bn, in the northwest of the country was originally expected to start in 2009.

But following Algeria’s plans to introduce a policy of taking a majority stake in any project involving foreign capital, announced in early August, national oil and gas company Sonatrach is to take part in fresh talks with the UAE companies (Agenda: Algiers reins in foreign ownership).

One executive close to the project says the principal issues include the ownership structure and government incentives that are likely to be offered.

“There are going to be a series of meetings in the next month,” says the executive. “After that, we should have a much better idea of what sort of level of ownership Sonatrach is looking to take.”

Algeria’s President Abdelaziz Bouteflika told media in August that some foreign investors had profited at Algeria’s expense by not reinvesting profits in the country.

The smelter, which will have an initial capacity of 700,000 tonnes a year (t/y), will occupy a 400-hectare site in the Beni Saf industrial zone in the country’s northwest, targeting the European market.

In addition to the Algerian smelter, Emirates Aluminium (Emal), another Mubadala and Dubal joint venture, is developing a 1.4 million-t/y aluminium smelter at Taweelah in the UAE, which is set to be the largest in the world.

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