Dubai-based firm forms $1.6 billion steel plant joint venture in Algeria

Industry: Steel 2016-11-26

Dubai-based conglomerate Emarat Dzayer Group said it had signed a joint venture agreement to develop a $1.6 billion steel factory in Algeria, boosting the North African country’s drive to diversify its economy and attract foreign investment.

Emarat Dzayer Steel Company will be a joint venture between Algeria’s state-linked Groupe Imetal, which will hold a 51 percent stake in the business through two subsidiaries, and 49 percent held by Emarat Dzayer Group, according to a statement.

The factory, in Annaba Province, will be operational within 24 to 30 months, Ajay Sethi, vice chairman of Emarat Dzayer Group, told Reuters in an interview on Thursday.

“We see a lot of demand from the local market because most of the steel is imported at the moment from places like the Gulf, Turkey, and Spain,” he said.

“We will have an advantage as our costs will be cheaper because we will have gas concessions from the government and we have state-of-the-art technology.”

In an attempt to adjust to lower energy prices, Algeria’s government plans to slash spending by 14 percent in 2017 after delaying infrastructure projects and raising gasoline, diesel and electricity prices this year as part of spending cuts.

The plant will produce 1.5 million tonnes of directly reduced iron per year and 1 million tonnes of steel in the form of rails, steel structures, and seamless pipes, it said.

Funding for the project will come from equity investments and long-term bank loans, Sethi told Reuters.

A second agreement signed between Emarat Dzayer Group and Groupe Imetal’s subsidiaries, Naftal and Asmidal, will involve the manufacture, blending and packaging of lubricants and industrial lube oils for the automobile, aviation, marine and industrial sectors to meet demand both locally and for export to the Middle East and North Africa, the statement said.

Emarat Dzayer Group, with interests stretching from energy to industry, already has a presence in Algeria through its subsidiary, Emarat Dzayer Oil, which is setting up a waste lube oil recycling plant, according to the statement.

Ahmed Hasan Abdul Qaher al-Sheebani, the group’s chairman, is also the co-owner of a tobacco manufacturer and a real estate firm in Algeria.