By Alex MacDonald
LONDON--Steel titan ArcelorMittal (MT, MT.AE, MT.FR) and
Algerian-stated-owned company Sider will boost steel production at
their jointly owned Annaba steel plant to capitalize on rising
steel demand in Algeria as auto makers open new factories.
ArcelorMittal and Sider said Monday they have signed an
agreement to invest $763 million to more than double Annaba's steel
production capacity to 2.2 million metric tons a year by 2017. The
companies will also invest in the steel plant's associated Ouenza
and Boukhadra mines which provide iron ore, a key steel making raw
ingredient, to the plant.
The deal will see ArcelorMittal reduce its holdings in the steel
plant and associated mines to 49% while Sider will boost its
ownership to 51%. ArcelorMittal previously had a 70% stake in the
two mines and steel plant. The investment plan will be funded with
equity contributions from both companies and bank financing.
The investment is in line with the Algerian government's
strategy to become self-sufficient in steel production given rising
steel demand from car manufacturers that are moving to North Africa
and building new assembly plants to take advantage of growing
vehicle demand there.
French car maker Renault SA (RNO.FR) last year announced plans
to build a car assembly plant in Algeria, its second in north
Africa following the construction of a greenfield facility in
Morocco that started production last year.
Annaba is the largest integrated steel plant in the Maghreb
region. It produces hot and cold rolled steel, used to make cars
and home appliances, and long steel products, which are used in
construction. The plant has two captive iron-ore mines and a
dedicated port that is linked by rail.
The two shareholders will invest in the blast furnace relining,
the modernization of the sinter plant, and the steel plant and
rolling mills at Annaba. The two shareholders are also investing in
the construction of a new electric arc furnace and rolling mill for
rebar and wire rod steel. The rolling mill will have a production
capacity of 1 million tons a year.
Write to Alex MacDonald at alex.macdonald@wsj.com
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