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ASEC Cement invests $550m in Algeria

Cairo:, January 19, 2008

A $550-million plant in central Algeria is the newest addition to ASEC Cement Holding’s regional expansion plans.

The company has signed a $550-million engineering, procurement and construction contract (turnkey contract) for a greenfield cement plant in the central Algerian region of Djelfa, it said in a statement.

ASEC Algeria is a subsidiary of ASEC Cement Holding (ACH), a Citadel Capital company created with a consortium of co-investors.

The project is ACH’s largest investment outside Egypt to date and is the company’s second Algerian venture and third regional investment within three months.

The first was the purchase of an 85 per cent stake in Iraq’s GRD Cement Co in November 2007. The landmark deal will allow ACH to construct a $250 million greenfield cement plant in northern Iraq.

In December, ACH announced its purchase of a 35 per cent stake and management control over Algeria’s government-owned Zahana Cement Co. for €32.6 million.

ACH Managing Director Ahmed Khalifa said the three deals “are a significant step toward increasing ACH’s exposure and expanding the company’s total production capacity to meet its goal of 18.5 million tonnes per annum (MTA) by 2012. They also utilize ASEC’s time-proven strategy of deploying technical expertise in greenfield projects.”

The three MTA Djelfa plant will also make an important contribution to the industrial development of the Djelfa region when it begins operations in three years’ time. The project will create 2,500 jobs during the construction period and will employ 1,500 when operations begin, including 700 indirect jobs, the company said.

“Djelfa’s production will primarily be sold in the local market, but once the gap in local demand is satisfied, excess production will be exported,” said Citadel Capital Principal Abdalla ElEbiary.

ASEC Algeria signed the Djelfa turnkey contract with sister company Aresco and Danish cement equipment, systems and services provider FLSmidth.

ACH has committed to increasing production capacity at the Zahana Cement Co. factory, located in western Algeria 40 kilometers away from the city of Wahran, to 1.8 MTA from the approximately 0.675 MTA that it produces today.

Both Zahana and Djelfa will deploy the latest environmentally friendly technologies and will focus on upgrading the technical skills of the Algerian workforce. Citadel Capital has donated €150,000 to establish a technical training school for cement workers; graduates of the school will be employed at the Djelfa and Zahana plants as well as at other Algerian companies.

“ACH has allocated a total of €77 million to upgrade the Zahana plant,” said Khalifa. “The upgrade will include the installation of new filters that will reduce emissions in line with the strictest international standards,” he added.

In Iraq, construction of the 1.5 MTA greenfield cement plant in the country’s Kurdish region, 30km from Sulaymaneya City, is expected to commence sometime around May 2008.

“We are now in the process of conducting geological research and finalising the infrastructure arrangements,” said Khalifa. “The actual construction of the plant is expected to take around 36 months to complete.”

ACH is the cement production arm of ASEC Group, a company owned by Citadel Capital and a consortium of co-investors. ACH is expanding its production capacity in the Middle East and North Africa through acquisitions, partnerships and greenfield operations.

ACH entered five markets in 2006-07, including Egypt, Algeria, Sudan, Iraq-Kurdistan and Syria; the company is also penetrating the Libyan and Ethiopian markets. ACH currently has 10 regional cement projects with total investments worth $3 billion. – TradeArabia News Service




Tags: cement | industry | Asec | ACH |

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