China is continuing to extend its influence Algeria, a country in Northwest Africa bordering on the Mediterranean. China has traditionally had strong ties with Algeria, which now has a large population of overseas Chinese. Most recent is China’s support for the main construction phase of a deep water container port at El Hamdania.

Last December Yooshin Engineering Corp of South Korea and Algeria’s own Laboratoire des études maritimes (LEM) finalized the detailed planning for the facility, which will have 23 container berths. Shortly after, Algeria signed a US$900 million loan agreement with the African Development Bank, which was at the time characterized as a general budget support programme.

Local newspapers are now reporting that a group of Chinese banks have been lined up for the additional debt funding needed for the US$3.5 billion project.

The container terminal is to be developed by China Harbour Engineering Company (CHEC) and China State Construction Engineering Corporation (CSCEC). Together they will own 49% of the operating company, with the Algerian Ports Authority owning 51%. There will be a management role for Shanghai International Port Group.

Construction work on the new port is scheduled to begin in March, and the first berths are due to be operational by 2021.

Oil and gas accounts for over 90% of Algeria’s export revenues, and government finances have been hit hard by low oil prices, prompting efforts by the government to diversify its economy. This situation has given an opening to China, and its One Belt One Road initiative. China is able to provide construction expertise and long term debt financing for important projects.

In April 2015 Algerian Prime Minister Abdelmalek Sellai made a state visit to Beijing, the first by an Algerian leader since the country won independence from France in 1962. The visit followed the signing of a comprehensive strategic partnership in February 2014.

In November 2016 Algerian state owned oil company Sonatrach awarded China Petroleum Engineering Construction a US$410 million contract to modernize a refinery near Algiers.

And in 2016 Sonatrach placed orders for two Liquified Petroleum Gas (LPG) carriers, to be built at Jiangnan Shipyard in Shanghai.

Neighbouring Morocco has had great success with its Tanger Med port project, and the government of Algeria sees its El Hamdania project as also likely to provide an important boost to the economy. There will be an industrial zone next to the port, which is located 70km west of Algiers.

Construction work will begin in March, and the project will be realized in phases through 2021. It will eventually grow to a capacity of 23 berths handling 6.3 million TEUs per year. Such a volume would make it the second busiest container port in Africa, behind Tanger Med which aims to be able to handle 9 million TEUs per year once Tanger Med 2 opens.

Tanger Med has managed to compete well with EU ports such as Valencia, Spain's biggest container port, and Gioia Tauro, the largest container port in Italy. The proximity to the deep water port has also helped persuade firms to set up factories in the industrial zone, while also encouraging export-driven firms to locate new factories in Morocco.

With a 20m draught, the El Hamdania deep water port will handle both regional and global trade, and two industrial zones will be built next door. Algeria also has major road projects underway, which will improve links for trucks, and attract freight from neighbouring countries that at present is routed through ports on the coast of West Africa.

Late last year French container shipping giant CMA CGM and Algeria-based CNAN NORD Spa signed a co-operation agreement on shipping transportation, in a sign that CMA CGM views Algeria as important for its future growth.

Image: existing port at Algiers.