Algeria Prioritizes Steel, Plastics as Foundation for Domestic Automotive Industry
Image: Rass El Mal
Takeaway
The Algerian government's focus on developing its steel and plastics industries presents significant opportunities for international investors and suppliers of technology and equipment. Companies involved in steel production, plastic manufacturing, and automotive component supply chains should closely monitor Algeria's industrial development plans and consider establishing partnerships or facilities to capitalize on the growing local demand and export potential.
Algeria is intensifying efforts to build a robust automotive industry by focusing on strengthening its foundational industrial sectors, particularly steel and plastics. The strategy emphasizes leveraging domestic raw materials to reduce reliance on imports and foster a self-sufficient manufacturing ecosystem. This approach aims to transform Algeria from a consumer market into a regional production and export hub for automobiles.
The Algerian government has been actively supporting the automotive industry through various policies, including the Automotive Industry Development Plan (2014-2020), which provided incentives like tax breaks and duty exemptions for manufacturers establishing local production facilities. Import restrictions and higher tariffs on foreign vehicles were also implemented to protect domestic manufacturers and promote local production. In November 2022, Law No. 22-384 established a regulatory framework for vehicle production in Algeria, outlining strict requirements for manufacturers seeking licenses. Despite these efforts, some members of parliament expressed concerns in 2025 about the slow progress of the automotive sector.
Tosyali Algeria is significantly contributing to the steel sector, with plans to begin production of automotive-grade steel in the third quarter of 2026 as part of a $2.5 billion investment program. The facility has a flat steel production capacity of 1.6 million tons, with 700,000 tons dedicated to automotive-grade products. The company also intends to expand its total capacity in Algeria by 3 million tons, aiming to double daily output from 50,000 to 100,000 tons within 30 months. In 2024, Algeria's crude steel production reached 4,520,000 tonnes, a 2.24% increase from 4,421,000 tonnes in 2023.
To bolster the supply of plastic components, Prime Minister Sifi Ghrieb laid the foundation stone for General Plastic Injection (GPI), a factory spanning 107,000 square meters in Tissemsilt. Scheduled to begin production in September, the plant will manufacture body parts, interior components, and technical accessories, utilizing assets from Plastic Algeria Components (PAC). The government mandates that automakers meet local content requirements, starting at 10% by the end of the second year of production and increasing to 40% by the fifth year. To meet the rising demand for plastics, Sonatrach Total Enterprise Polymeres' new polypropylene project, with a production capacity of 550,000 tons annually, officially entered its construction phase in 2023.
Several international automakers, including Stellantis (Fiat), BAIC, and JAC Motors, already operate assembly plants in Algeria. Chery, Iveco, and Hyundai are nearing completion of their projects. Jingdong Steel's $500 million steel plant in Algeria is 60% complete and is expected to be commissioned by late 2026 or early 2027. The plant will have an annual production capacity of 200,000 metric tons of steel sheets and 300,000 metric tons of steel pipes.