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Algeria: Algeria: Mineral Industry Overview

2011/11/26

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 Algeria: Mineral Industry Overview

In 2009, the North African country of Algeria was a significant producer and exporter of mineral fuels. Algeria was the sixth ranked producer of natural gas in the world and accounted for 2.7% of the world’s natural gas output and 2.0% of the world’s crude oil output. The country held 4.5 trillion cubic meters of natural gas reserves, which was 2.4% of the world’s total reserves, and 12.2 billion barrels of crude oil reserves, which accounted for 0.9% of the world’s total reserves. Algeria was the second ranked crude oil producer in Africa after Nigeria and the 15th in the world in terms of the volume of its crude oil production. Algeria produced iron and steel; precious metals such as gold and silver; and industrial minerals, including barite, bentonite and other clays, cement, crushed stone, gravel, gypsum, helium, limestone, marble, nitrogen fertilizer, phosphate rock, pozzolan, quartz, salt, and sand. Furthermore, the country has large deposits of unexploited minerals, including celestine, diamond, manganese, quartz crystal, rare-earth minerals, tungsten, and uranium.

Minerals in the National Economy

The Algerian economy grew, in real terms, at a rate of 2.4% in 2009, which was the same growth rate achieved in 2008, despite the adverse effects of the global financial crisis and the subsequent decrease in value and volume of the country’s hydrocarbons trade. Except for the hydrocarbon sector, which contracted by 6% in 2009 compared with a 2.3% contraction in 2008, nonhydrocarbon economic sectors grew by 9.3% in 2009 compared with 6.1% in 2008. The value of hydrocarbon production, which composed 31.7% of Algeria’s gross domestic product (GDP), decreased by 36% in 2009 compared with an increase of 30% in 2008. The decrease was attributable to lower world crude oil and gas prices. Crude oil prices for Algeria averaged $61.50 per barrel in 2009 compared with an average of $99.00 per barrel in 2008. The metal and industrial minerals industries grew in value by 3.4% in 2009 compared with 9.8% in 2008 and 8.0% in 2007. The chemical industry grew by 2.0% in 2009 compared with 2.5% in 2008. The construction sector contracted by 1.0% in 2009 compared with a similar contraction of 1.6% in 2008. The flow of foreign direct investment to Algeria increased by 8.4% to $2,847 million from $2,626 million in 2008 and Algerian investments abroad decreased by 2.8% to $309 million in 2009 from $318 million in 2008.

Government Policies and Programs

The Ministère de l’Energie et des Mines (MEM) [Ministry of Energy and Mining] was responsible for regulating the activities of the mining industry through its numerous agencies. Agence Nationale du Patrimoine Minier (ANPM) [Algerian Mining Authority] and Agence National de la Geologie et du Controle Minier (ANGCM) [National Agency of Geology and Mining Control] were created by Mining law No. 01-10 of July 3, 2001. ANPM was responsible for awarding mining licenses. In 2009, ANPM awarded 115 permits, including 105 exploration permits and 10 exploitation permits, which was a decrease of 31% compared with the 166 permits granted in 2008. A total of 1,093 mining permits were awarded in the period 2000-09 and generated more than $95 million of revenue for the treasury. ANPM maintained a database for all mining companies in the country and began issuing a new periodical newsletter, la lettre de L’ANPM, in 2009, which provided information on Algeria’s mineral resources and on ANPM’s activities. ANGCM conducted geologic surveys and monitored the country’s mining operations (Source: Energie & Mines, 2010b; Ministère de l’Énergie et des Mines, 2010).

Ordinance No. 06-10 of July 29, 2006, regulated natural gas and petroleum operations, modified, and supplemented law No. 05- 07 of April 28, 2005, in terms of its relation to hydrocarbons. The law granted Sonatrach 51% ownership of hydrocarbon projects in the country. Environmental laws applicable to the mineral industry included law No. 03-10 of July 19, 2003, and associated decrees, and law No. 05-12 of September 4, 2005. Ordinance no. 07-02 of March 1, 2007, amended and supplemented mining law No. 01-10 of  July 3, 2001. The new mining law affirmed parity for all investors; allowed separate surface and underground mine tenure; ensured that disputes could be appealed to international arbitrators; gave incentives for importing equipment for mining operations; and provided custom-tax exemption and rebates on extraction royalties of minerals.

Agence Nationale pour la Valorisation des Ressources en Hydrocarbures (Alnaft) [National Agency for Hydrocarbon Resources Valuation] was established in 2008 to administer natural gas and oil bidding rounds. Alnaft launched a round of bids for hydrocarbon exploration in September 2009 for 10 permits but only 3 were awarded. Alnaft planned to launch a new oil and gas bid round in 2010. Executive decree No. 09-304 created Provincial departments of energy and mines at the Wilaya (Province) level. Executive decree No. 09-313 of October 6, 2009, created the Algerian Institute of Mining (Source: Alexander’s Gas & Oil Connections, 2010).

Production

In 2009, Algeria’s crude oil (including condensates) production decreased by 9.1% and dry natural gas output decreased modestly by 5.1% compared with 2008 output levels. In 2009, there were notable increases in the production of silver, by 75%; kaolin, by 73%; gold, by 54%; salt, by 34%; feldspar, by 13%; diatomite, by 11%; and cement, by 8%. Noted decreases in mineral commodities output included a decrease in silica sand production by 51%; phosphate rock, by 44%; tuff, by 38%; barite and iron ore, by 37% each; pozzolan, by 33%; crude steel and pig iron, by about 29% each; and calcite, by 13%.

Structure of the Mineral Industry

Entreprise Nationale des Produits Miniers Non Ferreux et des Substances Utiles, S.p.A. (ENOF) was a state-owned company of production of nonferrous metal mineral commodities. ENOF had three subsidiaries: Société Algérienne des Granulats S.p.A. (ALGRAN), Société des Mines de Baryte d’Algérie S.p.A. (SOMIBAR), and Société des Bentonites d’Algérie S.p.A. (BENTAL). SOMIBAR produced barite from three barite mines located at the Boucaid Mine in Tissemsilt Provence, the Amin Mimoun Mine in Khenchella Province, and the Mellal Mine in Tlemcen Province. BENTAL produced bentonite from the Mahgnia Mine in Tlemcen Province and the M’Sila deposit in Mstagnem Province. ALGRAN produced aggregates and limestone from nine quarries spread throughout the country (Source: Mining Journal, 2009).

Office National de la Recherché Géologique et Minière (ORGM) [The National Office of Geological and Mining Research] was a partner with almost all the mining companies involved in exploitation, exploration, and prospecting activities in the country. The Government-owned Entreprise Nationale du Fer et du Phosphate (Ferphos Group S.p.A.) managed Algeria’s production of iron ore, foundry, phosphate rock, pozzolan, and other building materials. Its subsidiaries included Société des Mines de Phosphates S.p.A. (Somiphos), which was the state’s phosphate mining company; Société des Mines de Fer Algérie (Somifer), which was the iron ore mining company; and Société de Pouzzolane et des Matériaux de Construction S.p.A. (SPMC), which produced pozzolan and other building materials (Sources: Agence Nationale du Patrimoine Minier, 2009; Mining Journal, 2009).

Sonatrach S.p.A., was Algeria’s state-owned national oil and gas company. It was responsible for oil and gas exploration, production, pipeline transportation, and marketing of hydrocarbons and byproducts. Sonatrach had 25 subsidiaries, including Entreprise Nationale de Commercialisation et de Distribution des Produits Pétroliers (Naftal) S.p.A, L’Entreprise Nationale de Canalisations S.p.A (ENAC), Helios S.p.A, Société Nationale de Raffinage de Pétrole S.p.A. (NAFTEC), and Société Nationale de Pétrochimie S.p.A. The state-owned Socièté Nationale de l’Electricité et du Gaz (Sonelgaz) managed electricity and natural gas retail distribution (Sources: Sonatrach S.p.A., 2010; U.S. Energy Information Administration, 2010).

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