In the face of new global changes, what is the exploitation of phosphate and iron in Algeria? University professor, international expert Dr Abderrahmane MEBTOUL elaborates.
At the last Council of Ministers, debates turned to the recovery of iron and phosphate deposits appropriateness. This is not novelty; as a young advisor to the Minister and Industry and Energy between 1974/1977, we discussed such projects within the framework of many studies. Furthermore, since then, how have all these studies in both foreign exchange and Dinars with no conclusive results cost?
The commercialisation of both iron and raw phosphate and derivatives depends as much on the strategy of a few global firms as on internal strategic management. Other factors like the cost of operations as well as the growth of the world economy play an essential role here.
The case of phosphate– As much as for iron, or energy-intensive cement units, the essential input is natural gas having to make arbitrage between the transfer price on the international market and the transfer to the units to generate a high added value. So the cost price of a tonne of ammonia at 4 Dollars/mmBTU would be 114 Euros per tonne, and on the contrary at 7 Dollars, we will have 200 Euros per tonne with a decrease in the last ten years of 10/15% depending on the geographical area. The price of derivatives is wildly fluctuating the urea fertiliser having been quoted between July and September at about 260 Euros per tonne. The increase in the world’s population and the demand for food are a determining factor in the growth of the phosphate market. Competition in the global market is very intense and relatively integrated, with the presence of limited vital players who get a significant share of global revenues. Key speakers include Russia’s Eurochem Group AG and PJSC PhosAgro; Canadian Agrium Inc. and Potash Corp. of Saskatchewan Inc. Norwegian Yara International ASA; C.F. Industries Holdings Inc. and Mosaik Co.; India’s Coromandel International Ltd.; Moroccan giant OCP S.A. and Israel Chemicals Ltd. According to a U.S. geological survey on phosphate rock 2019, mining production (+ réserves) en 2018 thousand tonnes is distributed as U.S. réserves 27,000-production (1,000,000) – Algéria réserves 1,300- production (2,200,000); the Global Total réserves being 70,000 (70,000,000).
The price per tonne of raw phosphate fluctuates; April 2020 $72.50 per tonne, in March 71.88, in April $70.75, in May at $72.90, and in June/July 2020 $75,000 per tonne, having been rated in October 2019 at $77.50 for sheet metal, in January 2020 at $72.50 per tonne. According to the World Bank, the general and medium-term trend in phosphate prices remains downward, and crude phosphate would trade in 2020 at around US$80-85 per metric ton, DAP around US$377.5 per metric ton and TSP at nearly US$300 per metric ton. According to the global rating agency, phosphate rock prices remained on average at $100 per tonne (at no charge onboard) in 2019/2020 and prices per tonne of phosphate rock (at no charge onboard) remained at $110 in the long run. Thus, if Algeria exports three million tonnes of raw phosphate annually at an average price of $100, a very optimistic assumption about world prices, at constant prices 2020, for 30 million Tonnes, it would get three billion Dollars and less than 2.5 billion Dollars at current prices. It must be said that in this sector, the expenses are very high (depreciation and salary expenses in particular) a minimum of 40%, thus making the net profit to about 1.8 billion Dollars for a price of $100 and less than 1.4 billion dollars for a price of $70. In the event of an association with an international partner, the net profit remaining for Algeria would be slightly more than 900/700 million dollars for both scenarios. We are far from profits in the field of hydrocarbons. To increase net profit, it is, therefore, necessary to embark on highly capital-intensive processing units with massive investments and medium-term profitability with the export of noble products, in the E.U., fertiliser/urea sold at more than 350 Euros per tonne in 2014. It was rated on an annual average in 2017 at 270 Euros per tonne. In April 2018, it was at 260 Dollars and at the beginning of May 220 to 250 Dollars per metric ton. In general, prices are very volatile, assuming perfect knowledge of the international stock market in order to avoid large losses in the event of low forecasts. Also, for a sizeable exportable quantity, this requires for Algeria, hefty investments and profitability in the medium term not until 2023/2025 if the project is in operation in 2020. Moreover, for a sizeable exportable quantity, this requires a partnership with international firms.
The Case of Iron – For September 20, 2020, iron is priced at 90 Euros per tonne, stainless steel 1921 Euros per tonne, steel 4520 Euros per tonne, aluminium 1364 Euros per tonne, scrap 148 Euros per tonne, zinc 1817 Euros per tonne, copper 5289 Euros per tonne, lead 1509 Euros per tonne.
As proof, in April 2019, the price of stainless steel was at an average of 2,598 Euros per tonne, rose by 2.8% year-on-year with stabilisation in May 2020 to 2600 Euros per tonne, being in high demand on the world market, depending on its destination and its applications, classified in four categories. Aluminium was at 1,460 Euros per tonne, down 9.4% month-on-month and 20.9%. The price of lead was at $1,658 per tonne, down 4.4% on a month-on-month basis and 14.5% year-on-year. The price of zinc was at 1,903 Euros per tonne, stable over one month and down 35.1% year-on-year. Furthermore, in November 2019, the price of steel was at $5,400 per tonne, down 23.6% year-on-year, and in May 2020, 4,740 Euros due to the coronavirus outbreak. In April 2020, the price of iron stood at $85 per tonne, down 4.7% month-on-month and 9.6%. International agencies estimate the world’s iron reserves at between 2018/2019, 85,000 million tonnes (M.T.). Australia leads with 23,000 MT, followed by Russia 14,000 MT, Brazil 12,000 MT, China 7,200 MT, India 5,200 MT, United States 3,500 MT, Venezuela 2,400 MT, Ukraine 2,300 MT, Canada 2,300 MT and Sweden 2,200 MT, Algeria according to Algerian reserves data would be about 3000 Tonnes but with exploitable deposits, estimated between 1,500 and 2,000 MT. The main iron ore producing countries are Australia: 39.8% (with 879 MT)- Brazil: 19.8% (with 436 MT) – China: 8.6% (with 191 MT) – India: 7% (with 154 MT) – Russia: 4.6% (with 101 MT) – Ukraine: 3.3% (with 73 MT) – South Africa: 3,2% (with 69 MT) – Iran: 2.6% (with 57 T – Canada: 2.2% (with 49 MT) – United States: 2% (with 44 MT) – Sweden: 1.2% (with 27 MT) – Kazakhstan: 0.6% (with 13 MT) – Other countries: 5.1% (with 113 MT) (Source: Natural Resources Canada). Steel is a fundamental product to our way of life and is essential for economic growth, the 10 largest producing countries between 2017/2018 are: China: 831,728,000 Tonnes, Japan: 104,661,000 T, India: 101,455,000 T, United States: 81,612,000 T, Russia: 71,491,000 T , South Korea: 71,030 T, Germany: 43,297,000 T, Turkey: 37,524,000 T, Brazil: 34,365,000 T and Italy: 24,068,000 T. In April 2020, copper was $5,058 per tonne, down 21.4% year-on-year. Evolution has not fundamentally changed since 2018. At a favourable price of $100 per tonne crude iron, for export of 30 million tonnes, we will have gross revenue of $3 billion. However, with this amount and more than 50% of expenses (the operating costs are very high), we are left with a net of the remaining $1.5 billion. This amount is to be shared with the foreign partner that in case of 30 million T, would be less than 800 million Dollars. This is because the exploitation of Gara Djebilet’s iron will require large investments in power plants, transmission networks, rational use of water, distribution networks that are lacking because of the remoteness of the sources of supply while avoiding the deterioration of the environment because the units are very polluting. Therefore, as with phosphate, only the transformation into noble products can provide greater added value for export. Because of the oligopolistic structure of the mining industry, at the global level, the only solution, if we want to export these noble products, is a win-win partnership with the reputable firms that control the segments of the international market that will not accept the restrictive 49/51% rule with bureaucratic burdens, with decisions taking place in real-time at the international trade level.
It is a question of avoiding the mistakes of the past by serious evaluations in terms of profitability and without a solid partnership, it is futile to penetrate the global market let alone the mining sector controlled by some international firms.
In the case of gold mines, let us avoid the unfortunate experience, with a massive liability, with the Australian company, Gold Mining of Algeria (GMA) where reserves of 173 tons have not increased one iota since 2007. All this raises the problem of mastery of strategic management. Like this drift of car assembly where we have now seen that it was a set for currency transfer traffic, going to predictable bankruptcies, after having perceived considerable financial and fiscal benefits. Like this utopia of dozens of cement complexes where we are currently witnessing the underuse of production capacity, the risk of plants cooling if storage is long-lasting, would increase the costs. The situation would result in unusable products for construction, except for those with points of support in Africa through their subsidiaries; otherwise, it would be difficult for other units to export, where, contrary to some discourse not based on any serious market research, market shares are already taken with many complexes being realised at the level of the Mediterranean basin. For this case, new construction methods worldwide are being saved from concrete round, cement and energy and as in Germany, is to use concrete to build roads often returning cheaper than imported bitumen. Algeria needs a strategic vision in which industrial policy must fit, in order to adapt to the new global sectors driven by perpetual innovation. Let us avoid utopias: Algeria will continue for many years to depend on hydrocarbons, with other raw materials making just an average profit to invest in democratic institutions, education, digital and energy transition. No country in the world that has relied solely on raw materials has succeeded in its development. Since the world is a world and this proves true with the fourth global economic revolution 2020/2030/2040 the prosperity of different civilisations has always rested on good governance, work and theoretical and applied research, a country without its elite being like a soulless body.
The value of a liberal arts education has become a pivotal discussion within the global higher education sector over the last decade. No longer confined to the hallowed halls of ivy-covered American colleges, this multidisciplinary approach, which focuses on developing creative thinking skills, has begun to transform the curricula of institutions worldwide.
To examine this further, the Times Higher Education MENA Universities Summit 2020, taking place at NYU Abu Dhabi on 10-12 March, will explore the benefits and challenges of broadening the liberal arts educational model across Middle Eastern and North African countries.
Fostering discussions on how to prepare students for a variety of career paths after graduation is high on the list of the summit’s objectives. Hoda Mostafa, director of the Center for Learning and Teaching at the American University in Cairo, will share useful practices to facilitate the leap between an interdisciplinary education and careers both in and out of academia.
Wasif Rizv, founding president of Habib University, Pakistan’s first liberal arts and science institution, will provide an instructional model from south-east Asia to demonstrate how a liberal arts education can develop talent to meet the demands of a global workforce.
Another key focus will be enhancing the research culture in countries where talent attraction has faced challenges. Rana Dajani, associate professor at Hashemite University, who established stem cell research ethics law in Jordan, will debate with other panellists which tools are needed to support the next generation of researchers in the MENA region.
Safwan Masri, the current vice-president for Global Centers and Global Development at Columbia University, who has written extensively on the role of Tunisia in the Arab Spring, will deliver the summit’s closing keynote, underlining the power of research and knowledge transfer in the region to ultimately promote a greater cultural understanding and bridge political boundaries.
The summit will include an exclusive THE rankings masterclass that will dissect the methodology behind the World University Rankings, giving an analysis of the MENA region’s successes and future opportunities. Additionally, delegates will enjoy a deep-dive into THE’s new University Impact Rankings, which are based on universities’ successes in working towards the United Nation’s Sustainable Development Goals.
John Gill, editor of THE, said: “We are at a crucial moment for the world on numerous fronts – from how to respond to global threats such as climate change, to how to navigate a path to greater understanding and collaboration. Higher education and research will play crucial roles in finding the answers.
“At this summit, we will discuss the role of liberal arts education, at a time of debate about how best to prepare students for the new economy, and how to support societies in transition. We will consider how a global perspective can transform the impact of education, and address the interplay between education and research in the MENA region. These topics touch on every aspect of what universities do, as institutions that educate, create new knowledge, and drive economic and social progress, so we are delighted to have such a diverse programme of speakers, and to be meeting at NYU Abu Dhabi, itself a great example of innovation.”
The Times Higher Education MENA Universities Summit 2020 will take place 10-12 March at NYU Abu Dhabi. Find out more.
“A multi-faceted investment strategy is needed to achieve the three objectives of income, growth and stability,” points out Willem Sels, chief market strategist, HSBC Private Banking.
The outlook for the Middle East and North Africa (Mena) region for the new decade is a “fascinating” one, full of continued economic reforms, transformation and market liberalisation, according to HSBC. “With these developments, opportunities are expected to be widespread, across multiple industries and across the region. The combination of supportive monetary policy and responsive central banks are a few of the additional supportive variables for the region,” it said in a release yesterday.
The new decade will not be as kind to investors as the last and this will mean a new path for investments, said HSBC Private Banking in its first quarter’s investment outlook. “We will most likely see a US recession at some point in the next ten years, and while central banks’ policies should remain accommodative, it is clear that the new decade will mean a new path for investments,” says HSBC Private Banking in its investment outlook for the first quarter of 2020. “A multi-faceted investment strategy is needed to achieve the three objectives of income, growth and stability,” pointed out Willem Sels, chief market strategist, HSBC Private Banking. In a low growth and low interest rate environment, returns are unlikely to be as high as they were in the past decade, and in an environment where broad-based market upside is lower than in the past, and political risks remain high, HSBC Private Banking believes diversifying risk exposures will be especially important. HSBC Private Banking says portfolios should avoid excessive cash balances as well as the lowest rated end of high yield. It favours dollar investment grade, emerging markets’ local and hard currency debt, complemented with dividend stocks, real estate and private debt instruments to generate further income. It also sees opportunities to boost the return potential of portfolios by focusing on quality companies with sustained earnings growth and, where appropriate, it believes some leverage can help boost the net income of portfolios. It can also make sense selectively to look to hedge funds and private equity to capture growth opportunities and private equity to look through short-term market volatility. “It’s a new path for investments, but sometimes, new paths lead you to the most interesting sights” Sels noted. In 2020-21, HSBC Private Banking says investors can expect interesting opportunities for long term growth in sectors, geographies or themes related to the ‘Fourth Industrial Revolution’ or ‘sustainability’. It is also optimistic that the ageing, urban, digital, mobile, sharing-based, knowledge-based, circular, fast-paced and increasingly Asian global economy provides companies and investors with plenty of opportunities.
Travel AND Tour World published on Monday, July 29, 2019, this article elaborating on the current tourism together with other types of related business activities in the Gulf region. Dubai with its impressive urban development, artificial islands and other coastline attractions has been for a time spearheading the regional shopping and business tourism. The recent economic uncertainties within the GCC countries as well as through the political movements of the US, the EU and all other heavyweights vested interests of the world economy seem to be behind this story.
Due to a slowdown in the emirate’s tourism industry, Jumeirah Group has cut hundreds of jobs and according to people familiar with the industry, it weighs on the operator of Dubai’s sail-shaped Burj Al Arab hotel.
As per sources hundreds of jobs were slashed recently by the operators of Burj Al Arab along with 24 hotels worldwide.
As the information was private the government-owned luxury hotel chain, which manages 24 properties in eight countries, recently shed about 500 jobs.
Jumeriah has more than 13,500 employees according to its website and most of the cuts were support roles.
The tourism sector is stalled causing Dubai’s hotels to struggle and the occupancy level was found to be the lowest during the second quarter since 2009.
The average daily rates and revenue available per room fell to 2003 levels as stated by STR, a global hotel data provider.
There has been an oversupply due to new opening ahead of the 2020 World Expo.
The geopolitical tensions, relatively low oil prices, the ongoing real estate and the retail slump has caused Dubai-based companies and real estate developer and banks to cut down their staffs.
New measures have been introduced by the Dubai government to stimulate the economy by lowering business fees and providing long-term visas.
The West Mediterranean, a basin for the mixing of cultures and fruitful dialogue between different civilisations.
Following a Meeting of the 5+5 in Marseille 23 and 24 June 2019, this contribution was my intervention as member of Algeria’s delegation headed by the Minister of Foreign Affairs before the various foreign representations and the President of the French Republic as part of The 5+5 Dialogue. A sub-regional forum for the ten Western Mediterranean countries that take part since its creation, five from the north of the Mediterranean (Spain, France, Italy, Malta and Portugal) and five from the southern shore (Algeria, Libya, Morocco, Mauritania and Tunisia), all working in the hope for concrete results for the benefit of both sides of the Mediterranean western basin.
The Algerian delegation delighted with Marseille, the seat of different cultures and venue for this final meeting where in a few months, we have carried out an important work showing the vitality of civil society in the western Mediterranean. It was not that obvious at the outset. From April to June 2019, civil society in the western Mediterranean on both sides worked together to bring concrete solutions to the region “through the implementation of concrete projects for human, economic and sustainable development. We hope that all of these reflections and proposals for initiatives will be shared today with leaders at this summit in Marseille to determine which ones will be implemented as a priority, the means and mechanisms to be implemented to forge strong links in all areas around the Mediterranean in order to boost cooperation, based on the conviction that civil society must be fully involved in the definition of a new “positive” agenda. I recall that recently with renowned experts from Algeria, Morocco, Tunisia, Mauritania and Libya and 15 European personalities during 2015 and 2016, we produced under my direction and that of my friend Camille Sari two books (1050 pages), one on political institutions, the other economic in all its diversity entitled “The Maghreb in the face of geostrategic issues published by Harmattan Editions, following on from my contributions on this subject at the level of The French Institute of International Relations between 2011 and 2013 on Europe-Maghreb relations.
The ideas are not
new but unfortunately have not been realized. I recall that during a meeting
almost similar at the UNESCO in 1993 at the initiative of Pierre Moussa with Mr.
Thom Bekki then Vice-President of South Africa on the theme – Africa-Maghreb as
part of the strategy Euro-Mediterranean, I had advocated in my speech the
creation of both a Euro-Mediterranean university as a place of fertilization of
cultures, against intolerance, and a Euro-Mediterranean bank and stock exchange
with financial instruments adapted to the situation for the realization of
concrete projects by promoting decentralized networks of economic, social and
cultural actors, involving international financial institutions and traditional
banks. I reiterate these proposals for
this summit of 5+5 in addition to the creation of an economic and social
council at the level of the Western Mediterranean (5+5) whose vocation is to
bring together the different segments of civil society, experience if successful
could be extended to a global civil society bringing together the different
regions of our planet in order to combat insecurity, migration and thus promote
a balanced and global solidarity space.
It is in this
context that I would like to welcome the initiative of His Excellency the President
of the French Republic, Mr Emmanuel Macron, to whom Algeria has given its
support from the outset. This initiative, it seems to me, is part of the new
transformation of the world, ecological challenges, the breakthrough of digital
and artificial intelligence to witness between 2025/2030/2040 a fourth global
economic revolution based on knowledge, which will influence all international
relations, recalling the conclusions of COP 21 and COP 22, which calls on all
humanity for a solidarity future. The 21st century will have three
strategic actors forging dialectical links: states that must adapt to
globalization (the centralized bureaucratic Hegelian state is outdated, the
North African states have unfortunately copied the French Jacobin system, a
blocking factor for reforms as shown by my friend Jacques Attali, the
international institutions that need to be renovated with the massive entry of
emerging countries including China, and civil society which will play an
increasingly important role more predominant, non-antinomic with the other two
players but complementary. The common hope is that this important meeting will
be able to turn the Mediterranean basin into a lake of peace, tolerance and
shared prosperity based on a win/win partnership far from any spirit of
domination, through tolerance and dialogue cultures of which I am deeply
Algeria is a strategic player in the Mediterranean and Africa since it played an essential role in the various meetings in preparation for the 5+5 meeting where it proposed concrete projects with a regional impact, favouring economic interests and the stability of the region, taking into account the transformation of the world. Algeria, endowed with the issue of Energy Transition, proposed projects from civil society, where the work of the Forum in Algiers organized in the form of four thematic sessions, namely: Renewable Energy and Energy efficiency; Electrical interconnections, Natural Gas as the engine of an energy transition and the digital transformation of the energy sector. It is that energy will be at the heart of the sovereignty of states and their security policies and their economic dynamics alter the balance of power on a global scale and affect political recompositions within countries as regional spaces. The energy transition refers to other subjects than technical, posing the societal problem. It can be viewed as the passage of human civilization built primarily fossil, polluting, abundant, and inexpensive energy, to a civilization where energy is renewable, scarce, expensive, and less polluting with the objective of eventually replacing energies stocks (oil, coal, gas, uranium) with flows of energies (wind, solar). This raises the problem of a new model of growth and consumption: all economic sectors and households are concerned. The important potentials of all forms of energy in the Mediterranean, that of wind or sun, or of fossil fuels present in its subsoil, can make this area contacts between millennia-old civilizations, which have always been subject to political tensions, a new energy region of the world, at the gates of Europe, Africa and the Middle East. Crossroads of three continents, fragile from an environmental point of view, the Mediterranean basin is also a region that provides energy, such as those of the wind or the sun, or fossil fuels present in its subsoil. The energy mix of tomorrow will be electrically dominant, as the electricity market is expected to increase by almost 80% by 2040. Solar thermal for export, combined with photovoltaic for internal consumption needs, is expected to be the most important resource for electricity generation. Hybridization with gas should already allow it to be competitive. Electric highways in continuous current to cross the Mediterranean could be used to meet the growing needs of Europe’s Mediterranean coast and superconductivity completed by liquid hydrogen cooling will be the most medium-term solution to meet the needs of Northern Europe.
After the mixed
results of the Barcelona Agreement and the Union for the Mediterranean, let us
hope that this summit can lead to concrete results for the benefit of the
people of the region. I am convinced only the culture of tolerance will allow
our space, in the face of the new challenges of globalization, to meet the
challenges of the 21st century in the face of fierce competition,
including the breakthrough of emerging countries, the rise of global terrorism
threat, the rise of protectionism detrimental to the growth of the world
economy, existing a dialectical link between security and development, to the
dangers of populism. Finally,
co-development in the Mediterranean via the continent Africa issue of the 21st
century can, as I pointed out recently in interviews with AFRICAPRESSE.PARIS
and the American
Herald Tribune, curb ensure security and avoid destabilization that would
have geostrategic repercussions for the entire Mediterranean and African
I wanted to stress during this meeting on behalf of Algeria, that a strategic player at the regional level will contribute to the success, based on a win-win partnership, of this enormous undertaking, an old dream, forging our common Mediterranean consciousness. I quote the conclusion of my speech: “Mr. President of the French Republic, you, who are the age of my son, hope that all together leaders of the 5+5 and civil societies of our region, supported by international institutions, will realize this old dream that I defend with the many Maghreb and European friends, for more than 30 years the Mediterranean, a place of mixing of cultures, tolerance and fruitful dialogue between different civilizations, our common destiny being to do business together.”
Finally, as I pointed out in an interview with Jeune Afrique, Paris on June 24, 2019, far from any vision of disaster, Algeria’s future holds immense hope as at the end of my interview, and I quote: “Our youth and the National People’s Army have shown unwavering maturity. But it is imperative to move beyond the current status-quo before the end of 2019 with transparent elections, as a longer transition period could inevitably lead the country to an economic and social drift. And as in economics, lost time is never caught back, the productive dialogue with concessions on both sides for Algeria being its benefit, accompanied by a profound restructuring of parties and civil society based on new networks, is the only way out of the current crisis.”
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Earth has been used as a building material for at least the last 12,000 years. Ethnographic research into earth being used as an element of Aboriginal architecture in Australia suggests its use probably goes back much further.
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