Algeria works to secure trans-shipment business in Mediterranean

Becoming a maritime hub on the Mediterranean Sea is a key priority for Algeria, as it competes with Southern Europe’s main ports – namely, Valencia and Algeciras in Spain, and Gioia Tauro in Italy – and especially with Morocco’s Tanger Med port. To do so, the government is allocating funds to construct a deepwater port to ensure sufficient capacity to accommodate large cargo ships, and to provide access to the main road and rail lines for further distribution inland.

New Port

The construction of El Hamdania deepwa-ter port, which will be located in the northern coastal town of Cherchell in the wilaya (province) of Tipasa, is a landmark for transformation. The $3.3bn endeavour, located 100 km west of Algiers, aspires to become a regional trading centre. In December 2016 the South Korean company Yuhill-Yooshin and Algeria’s Maritime Study Laboratory certified the feasibility of the project. The port will offer 23 docks capable of accommodating 25.7m tonnes of goods per year once it commences operations. By 2050 the government expects the port to reach annual cargo traffic of 35m tonnes.

The project is being developed under a joint venture between the Algerian Port Services Public Group, a consortium of public and private companies that holds 51%, alongside China State Construction and Engineering Corporation and China Harbour Engineering Company, which together have a 49% stake. The latter two investment groups secured ownership of nearly half the project when Algeria accepted a long-term financing loan from China. With a completion timeline of seven years, the port is expected to begin activity four years after building starts under the management of another Chinese firm, Shanghai Ports.

However, the project is advancing at a slow pace. While construction was due to commence in March 2017, Abdelghani Zalène, minister of transport and public works, asked for the finalisation of technical details in August so that the project could begin, local media reported. Although the project is still gathering the necessary financial and technical resources, Algeria secured a $900m loan from the African Development Bank in February 2017, which allowed the project to proceed. If work begins before the end of 2017, the first stage of the facility could be operational in 2021, with full completion expected in 2024.

The development of road and rail connections to the port would provide a holistic network for the efficient transport of cargo. The port is planned to connect to the East-West Highway by a 38-km stretch linking Cherchell to El Affroun. To manage the freight, the construction of a 400-ha trading logistics platform and four industrial areas across 2000 ha were being outlined as of July 2017. China’s state-owned shipping line, COSCO Shipping, has suggested that it could make El Hamdania its hub in the western Mediterranean. Seeking to attract trans-shipment business to serve West Africa, the completion of the Trans-Saharan Highway (see overview) will enable containers to reach many parts of landlocked Africa more quickly.

Business Expansion

The policy to reinforce port capacity also extends to all related operating infrastructure and services. For instance, ERENAV, the company for naval repairs under the Algerian Maritime Transport Group present at the ports of Oran, Arzew, Béjaïa and Algiers, provides maintenance to national and international vessels. With the expected increase in sea traffic, the growth potential for the entity is significant.

The maritime strategy also includes an enlargement of the national fleet through the acquisition of additional cargo ships and the development of business know-how, detailed in an agreement reached with global shipping firm CMA CGM (see overview).

The slowdown of the economy as a result of lower hydrocarbons prices is notably shaping, and sometimes delaying, the plans. However, opening up to new commercial lines, growing its maritime fleet and providing intermodal transport connectivity is boosting Algeria’s capacity to compete as a regional trading centre.