Algeria, China sign pacts ahead of US$6B mega phosphate project

Algeria and China on Monday signed cooperation documents for the implementation of a mega integrated project worth 6 billion U.S. dollars for the exploitation of phosphate in the eastern region of Algeria.

The deals were signed by CEO of Algerian energy giant Sonatrach Abdelmoumen Ould Kaddour and Chairman of CITIC Construction Chen Xiaojia in province of Tebessa in east Algeria.

The ceremony was attended by Prime Minister Ahmed Ouyahia and his cabinet officials, in addition to prefects of four eastern provinces involved in the project.

The two parties are due to meet again in December to sign the shareholder pact for the establishment of the consortium group, as a final step that precedes the start of the construction stage of the project due early 2019. The production phase is planned for 2022.

The project will be realized in partnership between CITIC Construction and three Algerian groups, namely Sonatrach, Asmidal and Manal.

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."

Chen said that "the project reflects a profound wisdom of Algeria in terms of serving its people, and we are proud to be selected to contribute in this process."

For his part, Kedour said that "the sharp fall of oil prices forced Algeria to adopt a new strategy that is based on diversifying its oil-dependent economy, and this mega phosphate project is in big step toward reinforcing this strategy."

"This is not the project of Sonatrach or CITIC; it is rather a federating project that will reinforce our partnership," he added.

It will enable Algeria to increase its phosphate output to 10 million tons a year, thus becoming the third largest phosphate reserves in the world.

China's share in this mega project is estimated at 49 percent, while the Algerian party will hold the majority share of 51 percent, in accordance with investment law of the North African country.

This integrated phosphate project is spread through four main places, namely El Hadaba mine in the easternmost province of Tebessa with an investment budget worth 1.2 billion dollars, "Sulphur Stone" area in the easternmost province of Souk Ahras with an investment worth 2.2 billion dollars, "the Black Stone" area in the north-eastern province of Skikda with an investment worth 2.5 billion dollars, and the extension of the port of the northeastern province of Annaba with an investment worth 200 million dollars.

The project will include the duplication of the railway connecting the production site to the port of Annaba, and connecting the sites with industrial water, gas and power.

In its construction stage, the project is due to generate more than 14,600 direct jobs.

Algeria aims through this project to be able to export annually fertilizer quantities worth 2 billion dollars, and gradually manage to increase its phosphate and natural gas reserves through the establishment of structured transformation and wealth-generating industry, which would pave the way for Algeria to become the third largest exporters of fertilizer in the world.