Algeria is intensifying its efforts to decouple its national economy from hydrocarbon volatility, leveraging a series of legislative reforms and multi-billion dollar projects in the mining and agricultural sectors. The North African nation, which relies on oil and gas for approximately 90% of its export earnings, is seeking to build a more resilient fiscal base as global energy markets transition toward lower-carbon alternatives.
The move follows a period of sustained high energy prices that have bolstered Algeria’s foreign exchange reserves, providing the government with the necessary liquidity to fund ambitious industrial infrastructure. According to the International Monetary Fund, Algeria’s economy is projected to grow by roughly 3.8% in 2024, supported by significant public spending and a nascent recovery in non-hydrocarbon activities.
A central pillar of this diversification strategy is the Gara Djebilet iron ore project in the Tindouf province. One of the largest iron mines in the world, it holds estimated reserves of 3.5 billion tonnes. The government has partnered with Chinese consortia to develop the site, with initial investments exceeding $2 billion. Once fully operational, the project is expected to satisfy domestic steel demand and generate substantial export revenue, marking a significant shift in the country’s industrial capacity.
In the phosphate sector, Algeria is advancing the Integrated Phosphate Project (PPI) in the eastern region of the country. This $7 billion venture aims to produce 5.4 million tonnes of fertiliser annually. By processing raw phosphate into high-value fertilisers locally, the government intends to position Algeria as a major player in the global agricultural input market, particularly targeting buyers across the African continent and Europe.
New Regulatory Framework Drives Industrial and Mining Expansion
The acceleration of these projects is underpinned by the 2022 Investment Law, which overhauled the regulatory environment to make the country more attractive to foreign capital. A key feature of the reform was the removal of the “51/49” rule for non-strategic sectors, which previously mandated majority Algerian ownership in all foreign-led ventures. The World Bank has noted that these structural improvements are essential for fostering a more dynamic private sector and reducing the state’s dominance in commercial activity.
The Algerian Investment Promotion Agency (AAPI) reported a surge in project registrations following the implementation of the new law. These registrations span manufacturing, food processing, and renewable energy components. To support this industrial growth, the government is also investing in a 6,000-kilometre national rail network expansion designed to link remote mining sites in the south to industrial hubs and ports in the north.
Agriculture has emerged as another priority for the administration of President Abdelmadjid Tebboune. In an effort to achieve food sovereignty and reduce a multi-billion dollar food import bill, the government has allocated large tracts of land in the Sahara for industrial-scale farming. A landmark agreement was recently signed with the Qatari firm Baladna to develop a $3.5 billion dairy farm project. Covering 117,000 hectares, the project aims to produce 50% of Algeria’s powdered milk requirements, creating thousands of local jobs and significantly reducing foreign currency outflows.
While non-hydrocarbon sectors are the focus of diversification, the state energy giant Sonatrach remains a critical engine for the transition. The company has announced an investment plan of $50 billion through 2028, with a growing portion allocated to reducing carbon intensity and exploring green hydrogen. Algeria is positioning itself as a potential green energy corridor for Europe, utilizing its existing pipeline infrastructure to export hydrogen produced from its vast solar resources.
Despite these gains, challenges remain regarding the pace of bureaucratic reform and the need for deeper financial sector liberalisation. Analysts point out that while the projects are massive in scale, their success will depend on the continued ease of doing business and the stability of the global commodities market. The government has indicated that the next phase of its economic plan will involve further updates to the Mining Code and the digitisation of public services to streamline administrative approvals for new enterprises.
Looking ahead, the Algerian government expects non-hydrocarbon exports to reach $13 billion by the end of 2025. This target, while ambitious compared to historical levels, reflects a determined shift toward a multi-sectoral economic model. The implementation of the African Continental Free Trade Area (AfCFTA) is also expected to provide Algerian manufacturers and miners with expanded market access, further incentivising the country’s move away from its traditional reliance on crude oil and natural gas exports.
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