OBG talks to Farid Benhadji, CEO, Manal

Interview: Farid Benhadji

What are the plans for the development of phosphate production going forward?

FARID BENHADJI: Algeria has a host of mineral substances, including phosphates. Despite efforts by companies in charge of geological mapping and mineral research, most resources remain largely untapped and the mining sector is underexplored. Algeria is a relatively small phosphate supplier, but plans are being implemented to reach 6m tonnes in 2013 and 12m tonnes by 2018. Algeria currently produces less than 2m tonnes of phosphates a year and FERPHOS, the state phosphate mining company, hopes to increase exports to 30m tonnes by 2020. This would see Algeria become the thirdlargest global producer of phosphate. Given currently high price for minerals in the market, investment in the sector is increasingly attractive. Should FERPHOS meet its 2020 target, phosphate sales could generate $ 7bn8bn a year for the state. Algeria’s total phosphate reserves are estimated at 6bn tonnes and more investment in the field is encouraged through joint ventures. Even if fully exploited, Algeria’s phosphate reserves should last another 65 years. However, the government is looking to diversify the industry vertically and not simply extract raw mineral phosphates, but rather have the processing capacity to turn materials into fertilisers, adding value to export sales. The government allocated $14bn to build three fertiliser plants by 2020, with a total installed capacity of 35m tonnes per year. Such an investment in fertiliser production will make Algeria one of the main producers in Africa.

What can foreign companies do to participate more actively in exploration efforts?

BENHADJI: The mining sector has been open since2001 and public authorities are keen to provide incentives and get more international operators involved. Indeed, there is a strong willingness to intensify efforts to attract foreign investment and expertise and build up the industry. Given its great deposits, there is much economic potential that has yet to be realised. In addition, proximity to Europe, the country’s main customer for minerals, as well as low labour costs and the government’s readiness to support companies willing to invest gives Algeria an advantage. Furthermore, rising commodity prices have prompted foreign companies to look to Africa for new deposits. In Algeria, this interest has come mainly from Australian and Chinese companies. Major mining operations currently under way in Algeria include ENOR, a joint venture to develop the Tirek and Amesmessa gold deposits. Terramin Australia has teamed with Algerian company ENOF and the National Office for Geological and Mining Research to develop zinc and lead deposits at Oued Amizour. However, Algeria has not seen involvement from European or American companies, and to do so the country needs to prove that it holds world-class deposits.

How do you assess current legislation with regards to investments in the sector?

BENHADJI: Algeria intends to attract foreign entrepreneurs. The current framework aims to boost and develop mining and allow the sector to realise its potential.

All interested parties have the same opportunity to participate in developing new projects. Investors can apply for a mining licence by participating in periodic bidding rounds or by participating with national companies. The current regulatory framework guarantees equal treatment of all investors; separate surface and underground mine ownership rights; the right to international arbitration in disputes; incentives for investors importing equipment required for operations; and advantages concerning the transfer of invested revenues, exemption from Custom tax and royalties, amortisation and rebates on mineral extraction royalties.

Mining activity is regulated by a licensing system.

Research activity requires a prospecting licence and exploration permit. Development activities require a mining concession, small to medium-scale mining exploitation permit, or an artisanal mining licence. The mining title has legal value, and is transferable and assignable.