In an attempt to offset declining revenues from hydrocarbons, recent years have seen authorities take key steps towards realising Algeria’s mining potential by enacting a new mining law and developing large-scale projects in the areas of phosphates, iron ore, base metals and gold. Up until recently, the contribution of mining to the economy has been fairly limited, with the sector accounting for less than 1% of GDP and registering around $200m in turnover. Now authorities have declared their intention to double this figure in the medium term, with the goal of reducing imports and finding new drivers of growth.
The Main Player
As a whole, the sector is mainly controlled by the government-owned industrial group Algerian Mines Co., which assumes responsibility for the development, exploration, exploitation and distribution of all non-fuel mineral resources in Algeria and manages the assets of four state-owned mining companies operating in non-ferrous metals (ENOF), phosphate and iron (FERPHOS), salt (Enasel) and marble (Enamarbre).
In 2014, Algeria was producing a range of 30 minerals, though iron and phosphates were the only minerals being produced on a large scale. Iron production – solely carried out by the company ArcellorMittal Tébessa, a JV between Luxembourg’s ArcelorMittal and local operator FERPHOS, decreased from 1.06m to 900,000 tonnes in 2014 due to lingering disputes between the company, the government and workers unions. As a result, Luxembourg’s ArcellorMittal gradually reduced its share in the company from an initial 70% interest to a 49% minority interest in 2013, before it decided to exit 100% of its shares mid-2015.
Iron Ore Prospects
Nonetheless, the government is looking to significantly boost iron production through the development of large-scale extraction projects, notably in the Gara Djebilet and Mecheri Abdelaziz deposits, containing estimated reserves of 2bn and 1.5bn tonnes of iron ore respectively. In October 2015, state-run metal announced it was holding talks with Chinese partners to develop the complex.
Recent results indicate that progress on the Gara Djebilet iron ore project is coming along steadily. Abdesselam Bouchouareb, minister of industry and mining, announced in December 2015 that a feasibility study conducted by a Canadian engineering firm proved successful and that a second feasibility study is underway. The first study indicated that there was the potential for significant deposits of minerals in the site. Bouchouareb went on to say that 2.5bn tonnes of iron ore can and will be recovered from the Gara Djebilet site.
Phosphate production has increased from 1.15m to 1.4m tonnes in 2014 and growth prospects bode well, with FERPHOS looking to increase output sevenfold to 10m tonnes by 2021. New mining projects are expected to come on line, such as the Tala Hamza Zinc Project, close to Bejaia, currently undergoing feasibility studies and owned by Western Mediterranean Zinc Spa (WMZ), a joint venture between Australia’s Terramin (65%), ENOF (32.5%), and the National Office of Geological and Mineral Research (2.5%).
There are also ongoing developments for lead and zinc in Sétif and Batna, barite in Béchar, bentonite in Tlemcen, and gold in Tamanrasset, as well as plans to double salt and marble production. From a legal perspective, a new mining law enacted in February 2014 fostered a more favourable environment for mining investment, clarifying regulations regarding exploration and exploitation. More specifically, it introduced three types of non-transferable mining permits, including mining, artisanal mining and quarrying permits, as a substitute to the former – more complex – concessions scheme.
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