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Algerian Government to Rescue Steel Complex

11/02/2013 12:33
Algeria to reacquire El Hajar steel complex

Algeria to reacquire El Hajar steel complex

The State of Algeria is poised to take control of the troubled Algerian subsidiary of the world’s largest steel company, ArcelorMittal, sources said on Sunday.  “The government through the public group, Sider, will soon take control of the majority stake in the steel complex” of ArcelorMittal El Hajar near Annaba (600 km south of Algiers) said former general secretary of the business union Smain Kouadria.  The agreement would allow ArcelorMittal Algeria to improve its financial situation after a difficult two years.

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Discussions between the Algerian Ministry of Industry and leaders at ArcelorMittal are being finalized, reported El Watan daily.  The amount of the transaction is expected to be approximately USD 200 million, according to the newspaper.  The public group, Sider, which already holds 30% of ArcelorMittal Annaba would raise its share to 51%.
 
The steel complex of El Hajar is currently owned 70% by ArcelorMittal and 30% by Snider.  In January 2012, former Algerian Prime Minister Ahmed Ouyahia promised that the state would intervene to prevent a possible closure of the steel complex, which is facing a cash crisis.  ArcelorMittal has subsequently entered into an agreement with an Algerian public bank on a credit line of 140 million euros to finance a development plan that would allow the complex to increase its production capacity.
 
"Despite the implementation of these financial measures, the financial position of ArcelorMittal Annaba (AMA) reached a critical level…in October 2012,” said El Watan.
 
In 2001, a 70% stake in the complex was purchased from the Algerian state by India’s Ispat, which is owned by Mittal.  The complex currently produces over one million tons of steel per year.
Author:    Muhammad Salman
Tags:    Algeria     steel     industry     business
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