Apart from the decline in oil prices, it is the only sign of the global economic meltdown's impact in Algeria – at least for the time being. The world's leader in steel is reviewing its plans for the North African country.

By Ihsane El Kadi, Algiers

Union members of the steel work complex in El Hadjar, located in the far east of the country in Annaba, were wondering on Saturday 15th November what share their factory would have in the 4 billion dollar cut in expenditure announced by the group Arcelor Mittal of which their plant is one of the three largest in Africa. The president of the world’s leading steel company, India’s Lakshmi Mittal, announced that in light of the 1.35% slip value in the group’s shares in London, he would decrease production by 10 – 15% in 2009 to adjust the supply of steel products to an increasing (poussive) demand. The Mittal Sider El Hadjar union’s general secretary, Smail Kouadria, was able to triumphantly announce that all jobs at the plant would remain in place. “The services previously handled by underwriters will now be provided by the factory. This is the strategy the group has decided to adopt facing the upheaval of the global financial crisis,” he explained. Twenty percent of the group’s underwriters were slashed from the region’s highly coveted list of service providers to the Arcelor-Mittal factory.

A high furnace closed for a month

Un haut fourneau fermé un mois The feeling of having survived the worst of this global storm was short-lived for El Hadjar workers. Arcel Mittal El Hadjar’s CEO, Frenchman Bernard Bousquet noted that the cessation of activities at the number 2 furnace, which had already been delayed for the last two years, will be effective this December. This will not be for economic reasons as was the case with the Gandrange factory “which lost 37 million euros in 2007”. “Although the furnace number 2 will be at a stand still for a month to replace the throats that we have already imported, cleared at customs and had delivered, our factory will continue production,” stated Kouadria to the local paper El Watan. “The rolling mill will cover production during this period. To do this, we imported 35,000 tonnes of semi-fabricated steel products (slabs and billets).” This should cover the next five months.

The Bellara project still on the drawing board

The plan to invest 1.5 billion dollars in Bellara, located 350 km east of Algiers, to build a new steel-manufacturing complex will take more time than expected. The plan comprises three direct reduction iron units with a total capacity of 5 million tonnes, a million tonne capacity electric oven for billet production, and a round, 600,000 tonne concrete rolling mill. The local authorities are committing to co-financing the construction of a 350 MW electrical plant that will reach the new steel-manufacturing centre. The uncertain perspectives with regards to global steel consumption in 2009 (no one is mentioning the 3% in growth projected by Lakshmi Mittal earlier in the year) are in actual fact less responsible for the blur surrounding the project deadlines as opposed to the eternal bureaucratic pitfalls thatthat all investment ventures encounter in Algeria. Arcelor Mittal also raised with the Algerian authorities its plan to mine the second largest iron deposit in Gara Djelibat to the southwest, not far from the Mauritanian border.

El Hadjar saved by Algerian demand

Today, the El Hadjar complex is the group’s smallest in terms of production volume, accounting for 1.3 million of the group’s 130 million tonnes. Its productivity is also among the lowest. “Production at this plant is only 147 tonnes per capita per year while in other countries such as South Africa, figures can reach as high as 500 – 1,000 tonnes per capita per year,” highlighted Messaoud Chettih, former CEO of the public group Sider which previously owned the complex before its privatisation. But the spokesperson for Arcelor Mittal had suggested that the plan to reduce the company’s costs and the number of employees would be uneven relative to the regions most affected by the slump in demand. What gives hope to El Hadjar is that it has a dynamic domestic market at its disposal – fueld by major infrastructural projects of which it only covers 25%. Another detail not to overlook is that El Hadjar’s mining costs per million tonnes produced is among the lowest in the group.