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Mining - Embassy of Canada to Algeria

April 2021

1. Sector overview

Algeria, a country of 44 million, is the largest and one of the wealthiest countries in Africa. The Algerian economy is heavily reliant on hydrocarbon revenues, and the sector is the backbone of the Algerian economy. 

Algeria remains mainly underexplored as regards to non-hydrocarbons mineral deposits. The country enjoys a huge untapped potential for several minerals including iron ore, phosphate, gold, copper, zinc, lead, marble, bentonite, barite, manganese, wolframite and other useful minerals. Most of the country’s mining potential, including minerals and rare earths, remains insufficiently assessed.

The authorities are keen to develop the industry, not only in order to boost minerals output, but also to provide raw materials for a range of emerging industries as part of wider efforts to diversify the economy away from its heavy reliance on hydrocarbons production.

The sector is mainly controlled by the government-owned industrial mining groups, which lead on the development, exploration, exploitation and distribution of all non-hydrocarbon mineral resources in Algeria.

Fact & Figures (Data from Itri Insight, Algerian private market intelligence firm)

Production and development

Iron ore and phosphate rock are currently the only minerals that are being produced in the country on a large scale.

Iron ore: The main iron ore operating mines in the country are located in the province of Tébessa in eastern Algeria, which contain total deposits of approximately 60 million tonnes. In July 2020, the Algerian President asked to start the development of Gara Djebilet, the largest known iron ore deposit in the country located in the south-west, to offset losses from oil and gas export revenues. Iron ore and concentrates represented Canada’s second biggest exports to Algeria in 2019 (about 109M CAD) after wheat.

Phosphate: Algeria’s phosphate deposits are estimated to be around 2 billion tonnes, while current production stand at around 1.5 million tonnes per year. Algeria was the sixth largest exporter of phosphates globally in 2018, totalling 120 million CAD, less than 5% of its global exports.

Zinc & lead: Algeria’s zinc potential in Oued Amizour in Bejaia Province in eastern Algeria can make the country among the top producers of this metal in the world. Zinc production in this project is estimated to reach 135,000 tonnes per year, while lead can reach 25,000 tonnes per year.

Gold: The Amesmessa gold mine in Tamanrasset (extreme south of Algeria) is estimated to hold 40 tonnes in a depth of 400 meters.

Manganese: Djebel Guettara Manganese prospect in Bechar in western south Algeria is estimated at around 3 million tonnes.

The country produces smaller quantities of a variety of industrial minerals such as barite, bentonite, clay, kaolin, diatomite, dolomite, gypsum, lime, perlite, rhyolite, sulphur and tuff.

Key players

2. Market and sector challenges

The mining industry represents less than 1% of GDP, underlining the fact that while the country appears to be rich in mineral, the sector has suffered from long-term underdevelopment due to strong dominance of the economy by the oil and gas sector and the remote location of some major deposits.

The industry still lacks experience, know-how, technology and attractiveness. State-owned mining companies require modernization reforms, while the government needs to establish clear, stable and attractive investment conditions.

Legislation

The 2014 mining law provided tax incentives for investors but limited the development of strategic minerals (tin, silver, gold, cobalt, manganese, zinc, titanium, diamonds, etc.) to state-owned companies, which can chose to partner with foreign investors on a 51/49% basis (majority shares for the Algerian side). This is done through direct consultations (not through tendering system) and require senior government approvals.

The 51/49% investment rule will be applied for all extractive mining resources investment projects as confirmed by the government in the official Gazette of April 22nd, 2021.

The Ministry of Energy and Mines is working on reviewing this mining investment law to make it more attractive to foreign investments.

Procurement

The procurement system of Algerian state-owned companies remains bureaucratic and based on lengthy tendering system. Government institutions and state-owned companies buy foreign-made goods and services by way of competitive or restricted tenders. Most government contracts are awarded through a two-step tender process: first, technical bids are reviewed to ensure compliance with tender requirements and to evaluate competing specifications, and then financial bids are reviewed. Mining and Mining-related tenders can be found on BOMOP, which requires a subscription. (https://bomop.anep.dz/en/home/).

Competition

The mining industry in Algeria is still at its early stages. The country is seeking international partners for the development of its untapped mining potential for different minerals.

Keep in mind

Algeria is not a market for quick sales. Investing time and effort in building relationships and understanding the country’s tendering system is key to the success of Canadian companies. Frequent visits to the market can make a real difference.

3. Sub-sector identification

Canadian Embassy, Algeria
Nasreddine Gouami,Trade Commissioner
nasreddine.gouami@international.gc.ca
Internet : http://www.infoexport.gc.ca/dz

Useful Internet Sites

Author’s Name: Nasreddine Gouami

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