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Egypt’s Ezz Steel company is planning to build a sponge iron plant in Algeria to take advantage of the Arab country’s massive iron resources and incentives to investors.
The company, one of the largest steel producers in the Middle East and North Africa (MENA), presented project details for a Direct Reduced Iron (DRI) facility to the Algerian Investment Promotion Agency (AAPI) at a meeting in the capital Algiers last week, the Agency said on its website.
Ezz Steel is the latest foreign company seeking to benefit from an improvement investment law introduced by AAPI four years ago with emphasis on attracting foreign capital through reduced tax, cheap gas, land and labour, besides export facilities.
Chinese company Jingdon Steel said in June last year it is planning to build a steel plant in Algeria at a cost of around $500 million, with half the output destined for the export market. The plant has a production capacity of 500,000 tonnes per annum.
“Ezz Steel presented details of its planned project in Algeria…the project includes the production of DRI [sponge iron], with ambitions to expand it into an integrated industrial complex encompassing the various stages of iron and steel production,” AAPI said.
While the AAPI statement didn't disclose project details, Turkey-based industry news portal Steelradar.com said last week that the project is expected to cost $780 million with a production capacity of 2.5 million tonnes per annum. The project's financing structure is expected to comprise $155 million in equity and $625 million in debt.
Sponge iron is used as a vital feedstock for electric furnaces in the steel industry, offering high quality and consistency over traditional scrap.
Algeria is investing heavily in one of the world’s largest iron ore mines to end imports and become a major iron producer and export. Gâra Djebilet mine in western Tindouf province contains nearly 3.6 billion tonnes of iron ore, of which at least 1.7 billion are recoverable with current technology.
In August last year, Algeria approved a new law to open its mining sector to foreign investors within a drive to tap its mineral wealth and diversify its oil-reliant economy.
The gas-rich OPEC member hopes that plans to expand its oil and gas industry along with the development of its mines and other sectors will help fund a persistent budget deficit, which is projected at nearly $40 billion in 2026.
(Writing by N Saeed; Editing by Anoop Menon)
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