Algerian industry sets sights on higher fertiliser production

 

With among the largest gas reserves in the world, Algeria is set to emerge as one of the largest international producers of phosphates in the coming years. Together with cheap energy prices and its close proximity to a range of markets, these factors make the country ideally suited to large-scale fertiliser production and export. Domestic production has been ramping up in recent years and is set to continue to do so following a major investment in the sector announced in mid-2016.

Joint Ventures

Fertiliser production is currently dominated by two major ammonia and ammonia-based fertiliser projects involving foreign companies, with a third facility to enter into production soon. The first of these, Fertial, was created in 2005 by government-owned fertiliser company Asmidal, which was set up as a unit of the state-owned oil and gas firm, but became a directly owned unit of the Ministry of Industry and Mining in 2015, and Spanish firm Grupo Villa Mar. Asmidal has a 34% stake in the firm and the Spanish company 66%. The firm, which had a local fertiliser market share of 33% in 2015 – during which the local market contracted by 10%, according to the firm – operates production facilities in both Arzew in the west of the country and Annaba in the east, and is currently in the midst of a five-year, €250m investment programme launched in 2014 to raise its ammonia production capacity by 40% to around 1.2m tonnes per annum (tpa).

The project is also aimed at reducing production costs, in particular by improving energy efficiency to counteract the higher gas prices prevalent since 2014 that have reduced profitability. Actual production of ammonia by the company stood at 637,000 tonnes in 2015, though this was lower than usual due to factors such as ongoing upgrade work and the shut-down of an ammonia plant at Annaba for over a month due to technical issues. Output of granulated products in 2015 stood at 139,635 tonnes. The firm, which says it the largest exporter of ammonia in the Mediterranean region, as well as the second-largest producer in the Arab world (after Saudi Arabia) and the seventh largest internationally, exports around 74% of its output. Production at its plants was shut down in January 2016 when its exports were blocked due to a failure to obtain the relevant permits. However, output resumed after 10 days.

In 2013 another foreign-backed joint venture project was inaugurated, namely integrated nitrogen fertiliser producer Sorfert Algérie, a joint venture formed in 2006 between Netherlands-based fertilisers and chemicals company OCI, which has a 51% share of the company, and state-owned oil and gas producer Sonatrach, on 49%. The firm’s Arzew plant has a gross anhydrous ammonia production capacity of 1.6m tpa and a urea production capacity of 1.26m tpa. Fully 80% of its output was exported to Western Europe and 10% to North America in 2015.

The country should also soon see the inauguration of a new ammonia and urea fertiliser complex in Arzew. The facility has been built by the Algerian-Omani Fertiliser Company, El Sharika El Djazairia El Omania lil Asmida, also known as AOA, a joint venture founded in 2008 by Omani firm Suhail Bahwan Group, with a 51% stake, and Sonatrach (49%), at an investment cost of $2.4bn. The plant, which will have the capacity to produce some 4000 tonnes per day (tpd) of ammonia and around 7000 tpd of granular urea, has reportedly been completed and was initially due to open in early 2015; however, as of late 2016 there had been no reports of its inauguration.

New Investment

July 2016 also saw Indonesian firm Indorama sign investment agreements worth an estimated $4.5bn with two state-backed Algerian firms for the creation of three phosphate and fertiliser-related projects. The Indonesian firm will hold a stake of 49% in all three. Under the agreement, Indorama and public mining firm Algerian Mining Company (Manadjim Al Djazaïr, known as Manal) will develop the Bled El Hedba phosphate mine in Tébessa province in the east of the country, partly with the aim of supplying phosphate feedstock to phosphate-based fertiliser projects. The mine, which will have a production capacity of 6m tpa, is due to become operational in 2019. Indorama, Manal and Asmidal will also build a phosphoric acid and diammonium phosphate (DAP) fertiliser plant in Oued El Kebrit in Souk Akhras province, also in eastern Algeria, with a production capacity of 1.45m tpa of phosphoric acid and 3m tpa of DAP fertiliser.

Lastly, the Indonesian firm and Asmidal will also build a gas-fed ammonia, calcium ammonium nitrate and technical ammonium nitrate plant in Hadjar Soud in Skikda on the country’s north-eastern coast. Information on Asmidal’s website suggests the plant will have capacity to produce 1.1m tpa of ammonia, 800,000 tpa of calcium ammonium nitrate and 200,000 tpa of technical ammonium nitrate. The two factories will together consume around 4.6m tpa of phosphate, 1.5m tpa of sulphur and 660,000 tonnes of ammonium. Abdesselam Bouchouareb, minister of industry and mining, said that all three projects would be completed in 2019.

The agreement also followed the inking of an agreement in April 2016 between Asmidal and French plant and animal feed company Roullier to establish a phosphate fertiliser and animal feed joint venture in the country, which will include construction of a phosphate processing plant in Hadjar Soud in Skikda (some initial reports suggested the plant would be located in Oued El Kebrit). The project, which has not yet been finalised, will cost an estimated $500m. Previous reports had suggested that a Saudi investor was also interested in one of the proposed projects, but this has yet to materialise.

Future Projects

The phosphoric acid and DAP plant at Oued El Kebrit will be part of a wider phosphate and nitrogen-based fertiliser complex to be built there at a cost of around $3bn. The facility’s planned capacity will be 4500 tpd of sulphuric acid and 1500 tpd of phosphoric acid, among other products. Other potential investors in the complex include Qatar Petroleum. The Qatari firm signed a memorandum of understanding with Algeria regarding a potential project in 2013 and Bouchouareb in 2015 said that a joint venture between it, Asmidal and Manal was still under consideration.

A section of railway running from Annaba to Tébessa via Djebel Onk is currently being upgraded in order to transport the output of the complex as well as raw phosphate from mines in the areas and iron ore produced in the region. Work on the project is due to be completed by 2020.

Asmidal is also seeking partners for 450, 000-tpa phosphoric acid plant in El Aouinet in Tébessa province (the facility will also have the capacity to produce 450,000 tpa of di-/mono-calcium phosphate and 200,000 tpa of triple superphosphate), as well as a sodium carbonate and ammonium chlorate fertiliser plant – it will have 500,000 tpa and 330,000 tpa of production capacity for the two commodities, respectively – as well as for a 50,000-tpa melamine plant, both to be located in Hadjar Soud.

Owned Alone

In addition, the firm is planning to undertake a number of projects on its own. These include a 240,000-tpa fertiliser blending plant to be built at the El Kerma production zone in Oran province in western Algeria and another plant of the same capacity at the Sidi Khaled industrial park in Bouira in the east of the country.

The company is also developing a fertiliser storage and distribution centre in Biskra province to serve the Hauts Plateaux and southern regions of the country. This facility will have capacity to stock around 2500 tonnes of solid fertiliser and approximately 350 cu metres of liquid fertiliser at a time.

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The Report: Algeria 2016

Industry & Mining chapter from The Report: Algeria 2016