China signs up for huge phosphate project in Algeria

Two years on from the Algiers-Beijing pact, this massive project to excavate one natural resource, phosphate, is partly aimed at reducing Algeria’s dependence on another, oil

China has stepped up its involvement in Algeria, with the signing of a joint venture to build a US$6 billion integrated phosphate plant in the region of Tebessa.

The Algerian side will hold a 51% stake in the project, held by Algerian corporations Sonatrach and Asmidal-Manal. The Chinese side, with 49%, is led by Citic Construction and local press say that it also features the Wengfu Group.

Citic will execute an integrated mining and processing project, making use of the Bled El-Hadba reserves of phosphate and natural gas, with rail links to a port facility.

In a sign of the strategic importance of the project, the 26 November signing ceremony was attended by Prime Minister Ahmed Ouyahia and his cabinet officials. The documents were signed by Sonatrach's CEO, Abdelmoumene Ould Kaddour, and Citic Construction CEO Chen Xiaoijia, at the headquarters of the Gas Transfer Department in Oglet Ahmed.

Ouyahia hailed the project as "the largest industry project in the last decade in Algeria, as it marks the beginning of a real partnership between Algeria and China".

Tebessa is 700 kilometres east of the capital Algiers, on the border with Tunisia. The phosphate project is expected to begin production in 2022, and is forecast to generate revenues of US$1.9 billion per year.

Algeria was hit hard by the collapse in oil prices in 2014, when Brent Crude plummeted from US$115 a barrel in June to US$55 just six months later, in December. The government has since turned to foreign partners to help build and finance major infrastructure projects, while also reducing the country's over reliance on oil & gas exports.

The various parties are due to meet again this month to sign the shareholder pact for the final establishment of the consortium, and it is hoped that construction will get underway early 2019.

The integrated phosphate project is spread across four main locations, and includes an extension to the port of Annaba, and rail links.

In Oct 2016, Algiers and Beijing signed a pact for the reinforcement and diversification of their bilateral partnership in various sectors, including: energy, metals, railways, iron and steel, and basic infrastructure.

The first meeting of the joint commission in charge of the implementation of the agreement held in Algiers drew up a list of five projects. These included the mega port of El Hamdania near Algiers, which is being built by China Harbour Engineering Company and China State Construction Engineering Corp. The Algerian Port Authority will hold a 51% stake, and Chinese companies 49%.