Construction materials could become Algeria's primary non-energy export

One of the largest manufacturing segments in Algeria is construction materials, which accounted for 2.2% of total country GDP and 10.4% of industrial GDP in 2016, with value added of AD101.3bn (€840.2m), according to the National Statistics Office. In 2016 segment GDP grew by 6.2% in real terms – up from 5.1% the previous year – making it the second-fastest-growing industrial segment, behind only wood, paper and cork. Growth slowed in 2017, to 3.7% in the first quarter and 2.8% in the second. Activity is roughly equally split between public and private sector actors: AD46.8bn (€388.2m) of sector value added originated with private companies in 2016, versus AD54.5bn (€452.1m) for state firms.

Cement Production 

The largest cement producer is the state-owned Groupe Industriel des Ciments d’Algérie (GICA), which operates 12 of the 17 cement plants in the country and has a production capacity of around 11.5m tonnes per annum (tpa). The second-largest player is LafargeHolcim Algerie, a unit of French construction materials firm LafargeHolcim, which operates three plants, one in M’Sila with a 5.2m-tpa capacity, one in Mascara with 3m tpa and one in Meftah with 1.5m tpa, as well as a recently inaugurated 2.7m-tpa joint venture.

National cement production was 21m tonnes in 2014, according to the most recent available data from the US Geological Survey. After hovering around 19m tonnes in previous years, factory construction and expansion projects are ramping up production. October 2017 was due to see the official inauguration of the Ciment Lafarge Souakri (Cilas) cement plant in Biskra, with a production capacity of 2.7m tpa. However, by late 2017 there were no further updates on this-. The facility, which was built at a cost of more than €200m and began operations in August 2016, is a joint venture between LafargeHolcim and local company Souakri Brothers. Further projects are in the pipeline, and in a 2017 report the Ministry of Industry and Mining forecast that national cement production capacity would roughly double to reach 40.6m tpa by 2020. GICA’s capacity alone is expected to rise to 20m tpa over the period, while Lafarge Holcim’s should hit 11.1m tpa.

Cutting Imports & Growing Exports 

Having grown strongly in previous years, imports stood at 6m tonnes in 2015. However, cement was among the products covered by the first round of import restrictions introduced in 2016 (see overview). This, in conjunction with the rising availability of locally produced cement, saw imports fall to around 3.5m tonnes in 2016. This brought down the cement import bill by 42% to $260m. Authorities are further limiting the availability of imports by not issuing any licences for grey cement in 2017.

In early 2017 LafargeHolcim Algeria predicted the country would have excess cement capacity of around 10m tpa by 2019. The ministry report forecast that rising production would give rise to even greater excess capacity of between 12.5m and 13.5m tpa. Much of this will be sold abroad, though the report warned there are limits to how much the country can expect to export in coming years, given finite regional needs and the quality and competitiveness of Algerian cement. In October 2017 Youcef Yousfi, the minister of industry and mining, said cement would become one of Algeria’s most important non-hydrocarbons exports, forecasting foreign sales to eventually reach around 15m tpa.

In February 2017 LafargeHolcim announced it would start exporting clinker and grey cement to West Africa in 2018, while the Cilas plant also reportedly intends to launch exports soon. According to the report, the most promising export markets are neighbouring Mali, Libya, Niger and Mauritania. These nations are set to have high demand for construction materials due to urbanisation, development projects and – in Libya’s case – post-conflict reconstruction.