For five years, Chinese investments in the North African country have been growing steadily in different sectors

China overtakes France in Algeria

AP/THIBAULT CAMUS - El presidente chino, Xi Jinping junto al presidente francés, Emmanuel Macron, durante una ceremonia de bienvenida en el Gran Salón del Pueblo en Beijing, China, el 6 de abril de 2023
photo_camera AP/THIBAULT CAMUS - Chinese President Xi Jinping stands with French President Emmanuel Macron during a welcoming ceremony at the Great Hall of the People in Beijing, China, April 6, 2023.

Algeria is leaving behind what has been its main partner for more than a century to look towards other markets. Proof of this is the recent $1.5 billion deal signed between Algeria's state-owned hydrocarbon company, Sonatarch, and the British oil services group Petrofac to design and build a petrochemical complex in northwest Algeria. The complex will produce 550,000 tonnes per year of polypropylene, a plastic material used in the automotive, construction and other industries.

The company's executives, together with a group of executives from Sonatrach, Asmidal and Alg茅rie Mines, visited China from 15 to 18 May to conclude new agreements with China. According to Sonatrach's press release, this visit is part of the "development of the integrated phosphate sector, a project carried out by the Algerian-Chinese Fertiliser Company, created in 2022 between the two complexes".  Algeria's Asmidal and Alg茅rie Mines and the two Chinese companies, Wuhuan and Tian An, will operate the phosphate mine in the province of T茅bessa in the far east of the country, and will carry out the chemical transformation of phosphate and natural gas and the manufacture of phosphate and nitrogen fertilisers and chemical products in the province of Souk Ahras.

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SUPTNIK/ALEXEY NIKOLSKY - In this file photo taken on July 27, 2018, Russian President Vladimir Putin gives a press conference at the end of the 10th BRICS (acronym for the grouping of the worlds) summit. major emerging economies, namely Brazil, Russia, India, China and South Africa) in Johannesburg.

According to the group's statement, the visit allowed meetings with companies that have relations with Sonatrach, in particular China National Petroleum Corporation which operates in Algeria through its subsidiaries Kunlun Digital, HQC, Huawei and Power to discuss investment opportunities and joint cooperation in the field of hydrocarbons, renewable energy, digital transition and new technologies used in the exploration and production of hydrocarbons.

The project was originally to be carried out by Sonatrach and Total, with the Algerian side holding 51% and the French company 49%, but the factory encountered administrative problems and work never started. The French partner, Total, has finally abandoned the project, reflecting the political will of the Algerians to strengthen cooperation with Chinese companies to the detriment of French companies.

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REUTERS/RAMZI BOUDINA - Headquarters of the state-owned energy company Sonatrach

Similarly, the El Hamdania Centre port project in the Cherchell region of Algeria is financed by a loan from the National Investment Fund and a long-term credit from the Chinese Exim Bank of China. In addition, the Asian company Shanghai Ports will operate the port. China is the biggest donor of funds for the creation of this port. This investment is part of China's strategy to create the belt of the new Silk Road, the so-called Belt and Road Initiative (BRI). The BRI is an extensive network of trade and export exchange links between China and various regions of the world that the Asian giant has been promoting since 2013.

These large investments are being made possible following the revision of the Law on Inward and Outward Investment and the legislature's effort to enact legislation to ease bureaucratic restrictions and offer tax and customs incentives to economic concessionaires, especially in strategic sectors such as energy and mining. With these foreign investments, Algeria hopes to revive its economy after the economic crisis experienced in recent years.

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REUTERS/DADO RUVIC - CNPC (China National Petroleum Corporation) logo

China's increasing investments in Algeria in the energy and logistics sector show China's desire to expand its power and influence in the Maghreb to the detriment of Algeria's traditional partners. In this regard, Algeria's application to join the BRICS, the economic organisation formed by Brazil, Russia, India, China and South Africa, is worth noting. China and Russia have already expressed their willingness for Algeria to join the BRICS, and negotiations are continuing to move forward with this initiative, confirming the North African country's desire to look increasingly towards Asia and reposition itself on the international stage.

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