Algeria’s rail tender aims to boost iron ore mining sector

Pexels/James Wheeler

• Mine holds 3.5bn tonnes of iron ore
• Access has to be improved
• Algeria has nearly 30 active mines

Algeria has issued a construction tender for a rail project that the government hopes will unleash the potential of an iron ore mine in a remote province.

Anesrif, a transport business set up by the government to expand and modernise the railway system, is seeking companies to build a 575km section to the Gâra Djebilet mine.

The deadline for submissions is October 7. The tender includes the supply and laying of track, construction of bridges, viaducts and tunnels and other civil engineering works.

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The Gâra Djebilet mine in the western Tindouf province was commissioned in mid-2022 and is targeting initial production of 2 million tonnes per year.

The iron ore mine, believed to be one of the world’s largest, spreads across an area of more than 125 million square metres.

Ionut Lazar, principal consultant at mining and metals specialist CRU Consulting, which offers business intelligence on the global mining sector, told AGBI that Gâra Djebilet faced “many substantial challenges”. The remote location “absolutely requires” a railway line to keep transport costs down, he said.

Algeria’s existing rail network stops almost 1,000km from the mine but Anesrif plans to expand it to link with Bechar province in the northwest.

“Trucking iron ore is not feasible over that distance,” Lazar said. “With a railway line extending all the way from the site to port, the cost can be kept to a manageable level, but the capital cost of building that railway is high.”

Gâra Djebilet reportedly contains an estimated 3.5 billion tonnes of iron ore, of which around 1.7 billion tonnes are exploitable.

The government was planning to invest up to $10 billion in the mine.

But Lazar said CRU is not including the mine in its base-case forecast for future production, because of the project’s challenges.

He said: “The iron ore is very high in phosphorous content, which makes it impossible to market directly” and added that even a planned dephosphorisation facility may not guarantee the iron is marketable.

Ambitious production goals

In July, the National Iron and Steel Company of Algeria and Chinese consortium CMH signed a deal for two Algerian-Chinese companies, the first focused on operating the Gâra Djebilet mine and the second to build a steel plant.

According to the agreement, the long-term annual production goal is 50 million tonnes by 2040.

Speaking earlier this year, Ahmed bin Abbas, director general of the Algerian National Steel Company, said the project would turn Algeria into one of the largest steel producers in the Middle East.

Algeria imported $1.2 billion of iron ore last year. Upon completion in 2025, the project is expected to provide iron ore worth $2 billion, reducing dependency.

The economy of Algeria grew by 3.2 percent in 2022, according to the World Bank, with the pace of non-hydrocarbon economic activity accelerating to 4.3 percent.

“Algeria’s economic prospects remain sensitive to volatile oil prices, thus the importance of the continued implementation of reforms to enable the private sector to become the driver of sustainable growth and economic diversification,” said Kamel Braham, World Bank’s resident representative in Algeria.

Algeria has significant mineral resources – including gold, zinc, copper and phosphates – and the country is counting on them to diversify its economy.

Algeria had nearly 30 active mines last year, with seven producing iron ore, according to data from Statista.