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Released September 10, 2015 | JOHANNESBURG
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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--While gross domestic product (GDP) forecasts have been drifting into negative territory for some emerging and developing economies, and uncertainty exists as to whether the Chinese economy is going to have a softer or harder landing than expected, prospects are mixed for North African countries. They range from very fragile to hopes based on plans and projects that were put into place before the recent security, political and currency upheavals.
On September 8, stock exchanges and currencies experienced gains when China reported moderately better-than-expected growth figures and the Chinese government signaled its intention to stimulate the economy via quantitative easing. In the coming weeks, GDP figures for countries, especially those dependent on resource and commodity exports, could be repaired after suffering significant damage in the past weeks, with major projects being mothballed.
In the first half of 2015, North Africa was gathering direction after being in the doldrums for a period. In 2014, the region attracted a higher share of foreign direct investment (FDI) projects than in 2013 (an increase of 22.2% in the overall African FDI input).
The region accounted for more than 50% of all African FDI inflows in 2014, against only 19.1% in 2013. The number of jobs created more than trebled to nearly 80,000, representing 42% of the African total.
During this period, Egypt regained its position as the second most attractive FDI destination in Africa, drawing 71 projects, showing 61.4% increase over the previous year, with an inflow of $57.9 billion, creating more than 51,000 jobs. Investors from the United Arab Emirates (UAE) played a key role.
Ambitious infrastructure projects are aimed at increasing the country's investment appeal. These include the widening of the Suez Canal and the parallel development of an industrial zone. The financial climate for investors has also been improved with tax and energy subsidy reforms.
With 67 FDI projects, Morocco was the third largest recipient of foreign investment in Africa in 2014, up 52.3% from 2013. The country has skilled workers with lower wage rates than in most developed markets according to EY (Ernst & Young Global Limited) (London, England). With its proximity to Europe and relative stability, the country is positioning itself as a gateway to Africa.
With 165 projects, North Africa was the only African region to show an increase in FDI projects in 2014. Although Southern Africa FDI projects fell 14.6% in 2014, the region still led with 568 projects.
The $2 billion first phase of the Bellara steel production complex in Algeria is due to enter the construction phase by the end of this year, with completion and the start of production in 2017. The developer of the joint venture project is Qatar International (49%), partnered with Algeria's national steel company Sider (51%). The first phase will produce 2 million tons of steel per year, rising to 5 million tons in the final phase, making it the largest steel producer in the region. The project also illustrates Gulf Cooperation Council (GCC) countries' interest in investing in large infrastructure projects in the region.
Algeria is also mulling development of the Gara Djebilet iron ore deposit, estimated to contain two billion tonnes of medium-grade ore, and construction of a steel plant with an output ranging between 5 million and 10 million tons annually.
Driven by the construction and infrastructure development sectors, steel demand in the GCC continues to grow, with some types of steel reported to have the potential to grow at a rate of 25% annually. The World Steel Association said demand for steel in the Middle East-North Africa (MENA) region was expected to increase 4% in 2015, increasing to 4.7% in 2016, representing one of the highest growth rates in the world. The UAE has plans for plants to produce a range of items ranging from heavy products for construction to specialized steels for industry and manufacturing.
Following the conclusion of the nuclear talks with world powers, Iran is looking at an economic boom in 2016. The country has attracted $29 billion in mining investments and plans to more than double steel production by 2025 and boost exports. Iran claims to hold 2.7 billion pounds of iron ore, which will feed the production of steel from 22 million tonnes in 2015 to 55 million tonnes in 2025. Iran is targeting an increase in steel exports of 12 million tonnes annually.
Iran's raw steel production rose 10% in the first quarter of 2015. The World Steel Association reports Iran is the largest producer of crude steel in the Middle East and 14th in the world. The Mobarakeh Steel Mill has a 47% share in the sector.
Turkey's steel industry is currently suffering from oversupply of its markets. Its current raw steel capacity is more than 50 million tons. Nevertheless, it aims to reach 85 million tonnes of steelmaking capacity and 70 million tonnes of steel production by 2023. The electric arc furnace (EAF) steelmaking route is common in Turkey, and it has one of the highest shares of EAF output in the world. The blast furnace-basic oxygen furnace (BF-BOF) has gained importance in recent years, accompanied by government plans to reduce the domestic industry's dependence on scrap by providing more incentives for domestic iron ore and ferro-alloy production. This could encourage a change in the structure of steel production in favor of BOF-based integrated mills.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
On September 8, stock exchanges and currencies experienced gains when China reported moderately better-than-expected growth figures and the Chinese government signaled its intention to stimulate the economy via quantitative easing. In the coming weeks, GDP figures for countries, especially those dependent on resource and commodity exports, could be repaired after suffering significant damage in the past weeks, with major projects being mothballed.
In the first half of 2015, North Africa was gathering direction after being in the doldrums for a period. In 2014, the region attracted a higher share of foreign direct investment (FDI) projects than in 2013 (an increase of 22.2% in the overall African FDI input).
The region accounted for more than 50% of all African FDI inflows in 2014, against only 19.1% in 2013. The number of jobs created more than trebled to nearly 80,000, representing 42% of the African total.
During this period, Egypt regained its position as the second most attractive FDI destination in Africa, drawing 71 projects, showing 61.4% increase over the previous year, with an inflow of $57.9 billion, creating more than 51,000 jobs. Investors from the United Arab Emirates (UAE) played a key role.
Ambitious infrastructure projects are aimed at increasing the country's investment appeal. These include the widening of the Suez Canal and the parallel development of an industrial zone. The financial climate for investors has also been improved with tax and energy subsidy reforms.
With 67 FDI projects, Morocco was the third largest recipient of foreign investment in Africa in 2014, up 52.3% from 2013. The country has skilled workers with lower wage rates than in most developed markets according to EY (Ernst & Young Global Limited) (London, England). With its proximity to Europe and relative stability, the country is positioning itself as a gateway to Africa.
With 165 projects, North Africa was the only African region to show an increase in FDI projects in 2014. Although Southern Africa FDI projects fell 14.6% in 2014, the region still led with 568 projects.
The $2 billion first phase of the Bellara steel production complex in Algeria is due to enter the construction phase by the end of this year, with completion and the start of production in 2017. The developer of the joint venture project is Qatar International (49%), partnered with Algeria's national steel company Sider (51%). The first phase will produce 2 million tons of steel per year, rising to 5 million tons in the final phase, making it the largest steel producer in the region. The project also illustrates Gulf Cooperation Council (GCC) countries' interest in investing in large infrastructure projects in the region.
Algeria is also mulling development of the Gara Djebilet iron ore deposit, estimated to contain two billion tonnes of medium-grade ore, and construction of a steel plant with an output ranging between 5 million and 10 million tons annually.
Driven by the construction and infrastructure development sectors, steel demand in the GCC continues to grow, with some types of steel reported to have the potential to grow at a rate of 25% annually. The World Steel Association said demand for steel in the Middle East-North Africa (MENA) region was expected to increase 4% in 2015, increasing to 4.7% in 2016, representing one of the highest growth rates in the world. The UAE has plans for plants to produce a range of items ranging from heavy products for construction to specialized steels for industry and manufacturing.
Following the conclusion of the nuclear talks with world powers, Iran is looking at an economic boom in 2016. The country has attracted $29 billion in mining investments and plans to more than double steel production by 2025 and boost exports. Iran claims to hold 2.7 billion pounds of iron ore, which will feed the production of steel from 22 million tonnes in 2015 to 55 million tonnes in 2025. Iran is targeting an increase in steel exports of 12 million tonnes annually.
Iran's raw steel production rose 10% in the first quarter of 2015. The World Steel Association reports Iran is the largest producer of crude steel in the Middle East and 14th in the world. The Mobarakeh Steel Mill has a 47% share in the sector.
Turkey's steel industry is currently suffering from oversupply of its markets. Its current raw steel capacity is more than 50 million tons. Nevertheless, it aims to reach 85 million tonnes of steelmaking capacity and 70 million tonnes of steel production by 2023. The electric arc furnace (EAF) steelmaking route is common in Turkey, and it has one of the highest shares of EAF output in the world. The blast furnace-basic oxygen furnace (BF-BOF) has gained importance in recent years, accompanied by government plans to reduce the domestic industry's dependence on scrap by providing more incentives for domestic iron ore and ferro-alloy production. This could encourage a change in the structure of steel production in favor of BOF-based integrated mills.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
