Algeria seeks foreign investment in mining sector

Looking to strengthen its economy, which continues to suffer under civil unrest, the Algerian government is seeking foreign partners to help develop its mineral assets.

Mining in the North African nation has been dominated by various state-owned companies exploiting large iron-ore and phosphate deposits, with mercury and zinc-lead mining playing a lesser role. In order to gain access to foreign expertise and capital, the government will now allow foreign mining companies to enter into four types of partnerships with state-owned companies:

* a joint venture, with the foreign company limited to a maximum 49% interest;

* a joint-stock company registered in Algeria, with the foreign company again limited to 49%;

* a production-sharing contract; or

* a service contract.

Also, foreign companies can obtain a 4-year exploration licence or a 30-year exploitation licence, the terms of which can be extended.

The new policy is being promoted by Youcef Yousfi, Algeria’s mines minister, and Abdelmadid Attar, chairman of state-owned oil giant Sonatrach. The two representatives recently delivered a presentation in Toronto as part of a tour of major industrialized countries.

To sweeten its offer, the Algerian government is making available a series of tax breaks, ranging from duty exemptions to reductions in social insurance payments. These will be granted on a project-by-project basis.

However, while Algeria is offering various projects for foreign partnerships, not all the country’s mineral deposits are being made available. The government will not grant exploration or exploitation licences to foreign companies for what it deems “strategic substances and locations.” These include the uranium-thorium deposits in the Tamanrasset region in the south, the 50-million tonne Ouenza-Boukhadra iron deposits in the southwest, the 1-billion-tonne Djebel-Onk phosphate deposit in the northeast; and the Amesmassa-Tirek gold deposits in the south.

Most of the projects up for grabs have been explored by the government’s l’Office National de Recherche Gologique et Minire (ORGM) and related agencies.

All of Algeria’s gold deposits are in the Touareg Precambrian Shield, in the south. The three largest — Amesmessa-Tirek, In-Abegui and Tiririne-Hanane — are characterized by vein-type mineralization.

The Amesmessa deposit contains a resource estimated at 5 million tonnes grading 14.1 grams gold per tonne, whereas the Tirek contains about 6.1 million tonnes of 14.7 grams gold. Both are near the Malian border and owned by state-owned Entreprise d’Exploitation des Mines d’Or (ENOR), in which Sonatrach and the Bank of Algeria each hold a 34% share.

The In-Abegui deposit, south of Tamanrasset, consists of gold-bearing quartz-tourmaline veins in a gabbro-dioritic massif.

The Tiririne-Hanane deposits lie about 750 km southeast of Tamanrasset near the border with Niger. Resources are estimated at 327,000 tonnes of 18.3 grams for Tiririne, and 118,000 tonnes of 16.2 grams for Hanane.

The most attractive base metal project available for joint venture is the Oued-Amizour volcanogenic zinc-lead deposit, 270 km east of Algiers.

Discovered in 1990, the stratabound deposit occurs at a depth of 250 metres and features a resource of about 30 million tonnes grading 5.7% zinc and 1.4% lead, including 11 million tonnes of 10.9% zinc and 3% lead. Other projects include two early-stage alluvial diamond exploration projects, Bled-El-Mass and Djebel Aberraz, in west-central Algeria, and the Bas-Chelif native-sulphur deposits in northwestern Algeria, which have combined resources of about 25 million tonnes grading 25% sulphur.

The government is also seeking foreign investment in several industrial mineral deposits, including wolframite, bentonite, diatomite, tin, barite, salt and marble.

The success of the new policy will depend largely on whether foreigners are willing to risk investing in a country that continues to be rocked by civil war between the military-backed secular government and Muslim fundamentalist insurgents. Since 1992, it is estimated that more than 80,000 people, including 120 foreigners, have been killed in the conflict.