meed-logo

line1 line2 line3
SIGN IN / REGISTER

Algeria’s $10bn iron project will catalyse local industry

7 September 2023

 

Progress on the project to develop the Gara Djebilet iron ore mine in Algeria’s western Tindouf province, as well as the development of related steel-making infrastructure, is expected to significantly boost the country’s economy.

The Gara Djebilet mine was commissioned in July 2022 with plans to produce 2 million tonnes a year (t/y) by 2026.

Officials have said they want to boost this to 50 million tonnes of iron ore annually by 2040.

It is expected that boosting production at the facility could require between $7bn and $10bn in investment.

Gara Djebilet is understood to hold the world’s largest iron ore reserves, with an estimated 3.5 billion tonnes at the location, of which around 1.7 billion tonnes are available for exploitation.

Low-cost steel

The mine is expected to bolster Algeria’s steel industry by reducing the need for iron imports. In 2022, Algeria imported iron ore worth $1.2bn.

By 2025, the project is expected to provide raw materials worth $2bn, boosting Algeria’s self-sufficiency in the iron and steel sector.

Low-cost steel could also help support the country’s expanding automotive sector, which uses steel to produce parts.

In March, the carmaker Stellantis announced plans to spend more than €200m ($213m) to manufacture several Fiat models in Algeria.

The plans involve the construction of a new plant, which it says will create nearly 2,000 local jobs and will have a production capacity of 90,000 vehicles a year by 2026.

Chinese partnership

In June, the Chinese consortium CMH and the Algerian state-owned steelmaker Feraal signed a partnership agreement to develop the Gara Djebilet mine and develop facilities to process the ore.

Under the terms of the agreement, two joint venture companies will be created.

One will focus on the Gara Djebilet mine development, and the other on a complex that will transform the iron ore into metal slabs.

Most of the workforce employed in extracting iron ore from the mine is expected to be Algerian since Feraal already has trained workers familiar with the extraction process.

The processing facility will require specialist knowledge that is less common among Algeria’s workforce. It is expected that a Chinese crew will initially be used and, over time, these individuals will pass on their skills to Algerian workers.

Iron ore processing

The planned facility for processing iron ore will be able to produce 500,000 t/y of iron ore concentrate.

It is expected to have a budget of between $120m and $150m.

A memorandum of understanding (MoU) relating to the processing facility was signed by Feraal and the Algerian steel producer Tosyali Algeria, a subsidiary of the Turkish Tosyali Holding, in April this year.

Under the terms of the agreement, the two companies will form a joint venture to develop the iron ore processing, which they intend to bring online within 24 months.

Transport links

On 6 September, Algeria announced that it was partnering with China to construct 6,000 kilometres of rail lines. President Abdelmadjid Tebboune says this move will help spur economic development across the country.

Priority will be given to implementing the 280km-long project to transport phosphate to Annaba port and the more-than-800km-long iron ore transport line to link the Gara Djebilet mine with Bechar.

The details of the financing arrangements for these projects should be scrutinised

If the iron ore mine and related projects go ahead as planned, the potential synergies are significant and could buoy productivity in the North African country.

However, successful outcomes for Algeria are not guaranteed, and the details of the financing arrangements for these projects should be scrutinised.

All of the latest major project partnerships with China were announced after 5 December 2022, when Algeria signed an executive plan with China for the “enhancement of cooperation within the framework of the Belt and Road initiative”, which Algeria joined in 2018.

The Belt and Road Initiative is China’s global infrastructure development strategy, which was launched in 2013 and has provided financing for major projects across the Asia Pacific, Africa and Central and Eastern Europe.

Key focuses of the initiative are infrastructure investment, construction materials, railways, automobiles, iron and steel.

The initiative has provided significant benefits in some countries, but in others it has led to problematic debts, with some major projects failing.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11128077/main2111.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Chinese and Saudi partners set up Hithium Manat

    17 October 2024

    Register for MEED's 14-day trial access 

    Chinese energy storage solutions firm Hithium Energy Storage Technology Company (Hithium) and the local Nabilah AlTunisi have formed a joint venture that will manufacture battery energy storage systems (bess) in Saudi Arabia.

    The joint venture is called Hithium Manat. The planned manufacturing facility has an annual production capacity target of 5 gigawatt-hours (GWh), according to an official statement.

    Hithium launched energy storage solutions designed for the region's harsh environment during a solar and storage conference held in Riyadh.

    According to Hithium, "These systems feature advanced sandstorm protection and robust high and low-temperature designs, supporting ultra-long discharge cycles of 12+ hours."

    It added that the new product line is "customised to meet the unique demands of the Middle East and Africa region".

    Nabilah AlTunisi is the founder and owner of Hithium Manat's local partner.

    "This strategic alliance will not only provide access to world-class energy storage technology but also generate local employment opportunities, stimulate technological innovation and actively contribute to realising the kingdom's Vision 2030 objectives," AlTunisi said.

    Battery energy storage market

    In August, National Grid Saudi Arabia, a subsidiary of state utility Saudi Electricity Company, awarded the engineering, procurement and construction (EPC) contracts for three energy storage systems to Riyadh-based investment group Algihaz Holding. The estimated $800m projects are located in Najran, Madaya and Khamis Mushait.

    National Grid also recently tendered contracts for the construction of five battery energy storage systems with a total combined capacity of 2,500MW across the kingdom.

    The planned facilities, each with a capacity of 500MW or roughly 2,000 megawatt-hours, are located in or within proximity of the following key cities and load centres:

    • Riyadh
    • Qaisumah
    • Dawadmi
    • Al-Jouf
    • Rabigh

    Every utility in the region is procuring or planning to procure bess capacity in light of growing intermittent renewable power in their grids. 

    The overall capacity of deployed bess globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, a GlobalData report issued in June said.

    The report cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    Related read: Battery storage gains foothold

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742375/main.jpg
    Jennifer Aguinaldo
  • Kahramaa invites Ras Laffan substation bids

    17 October 2024

    Qatar state utility General Electricity & Water Corporation (Kahramaa) has tendered a contract to upgrade the Ras Laffan C substation.

    The scope of work covers the upgrade of existing 220-kilovolt (kV) and 400kV substations and the addition of 220kV gas-insulated switchgear bays and an 800-megavolt amps transformer.

    Kahramaa issued the tender on 15 October and expects to receive bids by 28 November.

    The project bid bond is valued at QR1.5m ($410,000).

    Separately, Kahramaa invited firms to submit their proposals for a contract to supply and install power transmission and distribution equipment, including providing and connecting substation main earth and equipment earthing, commissioning fitted substations and pre-commissioning protection testing for 11kV switchgear panels.

    Kahramaa expects to receive bids for this contract, with a bid bond of QR3m, by 14 November.

    Kahramaa is expanding its power generation capacity. Negotiations are under way with the sole bidder led by Japan's Sumitomo Corporation for a contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day.

    Earlier this month, Qatar Electricity & Water Company announced plans to develop a 500MW peak power unit in Qatar's Ras Abu Fontas area.

    Construction is also under way for two solar farms with a total combined capacity of 875MW in Mesaieed and Ras Laffan.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12742343/main.jpg
    Jennifer Aguinaldo
  • Neom starts Tabuk highway prequalifications

    17 October 2024

     

    Saudi Arabian gigaproject developer Neom expects firms to submit their prequalification applications for a project to build a mountain road near Tabuk later this month.

    The 11.5-kilometre (km) Tabuk mountain road project comprises a 4km tunnel and 7.5km dualisation of an existing road, according to an industry source.

    Neom expects to receive statements of qualifications from interested engineering, procurement and construction contractors by 29 October.

    The tender proceedings for Neom's transport infrastructure projects are gathering momentum.

    Neom received expressions of interest for a contract to build a coastal highway and infrastructure project catering to the Magna development on the Gulf of Aqaba on 15 October.

    The project, called Magna Infrastructure Packages, is split into three. Package one is 13km, package two is 42km and package three is 41km. The packages cater to the development’s north, central and south areas.

    The design-and-build project covers utilities for water, power, mobility, sewer, buildings and highways, in addition to the coastal highway. The project is expected to be completed by 2027.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12738632/main.gif
    Jennifer Aguinaldo
  • Adnoc completes Fertiglobe stake acquisition

    16 October 2024

    Register for MEED's 14-day trial access 

    Abu Dhabi National Oil Company (Adnoc) has completed the transaction to acquire a majority stake in UAE-headquartered Fertiglobe, the largest nitrogen-based fertiliser producer in the Middle East and North Africa region.

    Adnoc has increased its shareholding in Fertiglobe to 86.2% through the acquisition of 50% + 1 share held by Netherlands-based OCI Global, which is backed by Egyptian billionaire Nassef Sawiris. The Abu Dhabi energy giant previously held a 36.2% stake in Fertiglobe.

    The remaining 13.8% of Fertiglobe’s shares trade on the Abu Dhabi Securities Exchange following the company's stock listing in October 2022.

    Adnoc announced the transaction to become the majority shareholder in Fertiglobe last December. Fertiglobe’s shares were priced at AED3.2 ($0.87) a share, valuing the deal at $3.62bn.

    Following the completion of the majority acquisition, “Fertiglobe’s current management team will stay in place”, including Ahmed El-Hoshy in his role as CEO, Adnoc said in a statement on 15 October.

    “Ahmed El-Hoshy spent 15 years growing OCI’s US and European business in ammonia and methanol via greenfields, brownfields and acquisitions, generating significant value for shareholders by leading recent divestments,” Adnoc said.

    Growing chemicals business

    Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, exporting to 53 countries with a collective market share of about 10% of global trade in these products.

    “The acquisition represents … the expansion of Adnoc’s low-carbon fuels business, and supports its goal to become a top-five global chemicals player,” Adnoc said.

    “Fertiglobe will become the platform for Adnoc’s growth in fertiliser and low-carbon ammonia,” Adnoc said in its statement.

    Adnoc added it will transfer its stakes in existing and future low-carbon ammonia projects to Fertiglobe “at cost and when ready for startup”, including its two projects in Abu Dhabi and other projects in its global portfolio. Adnoc has yet to specify the low-carbon ammonia and blue ammonia production projects.

    MEED understands that the first Abu Dhabi project in question is the blue ammonia facility in the Taziz Industrial Chemicals Zone in Ruwais. Fertiglobe has partnered with South Korea’s GS Energy Corporation and Japanese investment firm Mitsui & Company to build the complex, which will have a production capacity of 1 million tonnes a year (t/y).

    In February last year, the joint venture awarded Italian firm Tecnimont the main contract for executing the engineering, procurement and construction works on the Taziz blue ammonia project.

    The second Abu Dhabi blue ammonia project that Adnoc could be referring to in its statement is a proposed scheme for which it signed a joint feasibility study agreement with British energy producer BP in May 2022.

    Adnoc further said that the two projects in Abu Dhabi will add 2 million t/y of output potential, more than doubling Fertiglobe’s current commercial ammonia capacity of 1.6 million t/y and increasing its total sellable capacity to 8.6 million t/y of net ammonia and urea combined, in addition to other announced global projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12735570/main1542.jpg
    Indrajit Sen
  • Neom receives interest for Magna coastal highway

    16 October 2024

     

    Saudi Arabia’s gigaproject developer Neom has received interest from firms for the contract to build a coastal highway and infrastructure project linking Neom to the Magna development on the Gulf of Aqaba.

    The project, called Magna Infrastructure Packages, is split into three. 

    Package 1 is 13 kilometres, package 2 is 42km and package 3 is 41km.

    The packages cater to the development’s north, central and south areas.

    According to an industry source, the design-and-build project covers utilities for water, power, mobility, sewer, buildings and highways. It could cost between $250m and $500m.

    Local and international engineering, procurement and construction (EPC) contractors are understood to have submitted their expressions of interest to participate in the tender on 15 October.

    The coastal highway and infrastructure project is expected to be completed by 2027, the source said.

    Magna consists of 12 developments featuring 15 hotels that offer 1,600 hotel rooms, suites and apartments and over 2,500 residences.

    The development will span a 120km-long coastal strip with an average width of 3.5km. The total land area is about 430 square kilometres.

    The Magna infrastructure is divided into six districts, as follows:

    • District 1 – Northern Gateway: includes 13 bridges and underpasses with a length of 1.9km, 18 wadi culverts and five drainage culverts
    • District 2 – Romantic Bay and the Cube: includes two bridges and underpasses spanning 360 metres, 40 wadi culverts and 24 drainage culverts
    • District 3 – Wadi Tayyib: includes two bridges and underpasses, 26 wadi culverts and nine drainage culverts
    • District 4 – Jungle Club: includes three bridges and underpasses and 17 wadi culverts
    • District 5 – Magna: includes two bridges and underpasses, 14 wadi culverts and two drainage culverts
    • District 6 – Southern Gateway: includes three bridges and underpasses, 31 wadi culverts and one drainage culvert
    https://image.digitalinsightresearch.in/uploads/NewsArticle/12735899/main.jpg
    Jennifer Aguinaldo