Algeria's president wants to open up mines to foreign investors, but lawmakers aren't convinced

Algeria's new push to open its vast mineral reserves to foreign investors has sparked a political firestorm. Lawmakers and opposition parties accuse the government of risking the country's sovereignty in its desperate race to revive a struggling sector and lure in hard currency.

This week, political parties and members of parliament voiced concern over the government's draft mining law, urging amendments or even a full withdrawal of the bill ahead of a scheduled vote on 26 June. 

Oppositional lawmakers argue the proposed legislation would open the door to foreign exploitation of the country's mineral wealth.

The most controversial issue is the draft law's Article 102, which restricts the share of national partners in mining projects involving foreign investors.

"You cannot frame the article in a way that caps national participation while granting a strategic advantage to foreign firms", said Ahmed Beljilali, a member of parliament, further warning that the clause effectively sidelines Algerian stakeholders in favour of foreign investors. 

The article stipulates that the national mining company would hold only up to 20 percent of the capital in any Algerian-registered entity partially or wholly owned by foreign actors, should that entity seek a mining licence.

The provision states that if the entity's capital increases, the national company's stake cannot be reduced unless it decides otherwise.

In competitive bidding cases, as outlined in Article 97, the national company's share will no longer be limited to 20 per cent and could exceed that limit.

This bill, presented to parliament last week by Energy and Mines Minister Mohamed Arkab, is part of a comprehensive strategy to attract foreign investment and improve Algeria's underperforming mining sector.

Algeria holds vast mineral wealth, including about 20 percent of the world's rare earth elements concentrated mainly in its southern regions, according to its officials.

Key projects like the Gara Djebilet iron ore mine, one of the largest globally with reserves of 3.5 billion tons, and the Bled El Hadba phosphate mine showcase the country's mining potential.

Official Algerian reports estimate that 31 different minerals are exploited by around 1,400 operators nationwide, yet the mining sector contributes less than 1 percent to the country's GDP as of the end of 2020.

The Algerian government argues that the new law introduces globally recognised incentives, simplifies investment procedures, and aims to create a more sustainable and appealing environment for both domestic and international stakeholders.

According to the government, the draft law is the product of more than three years of consultations and technical studies. 

Officials say the bill is designed to meet national market demands while boosting exports and hard currency revenues, particularly as the sector has struggled with declining output in recent years.

The Council of Ministers approved the draft back in February 2023, with President Abdelmadjid Tebboune backing the strategic importance of mining for the country's future. 

At the time, Tebboune called for the modernisation of the sector and the elimination of bureaucracy in exploration and extraction, advocating for scientific and technological input. 

Yet, opposition to the Algerian president's move has been mounting, in one of the rare instances of open dissent under the current political climate.

In a statement issued on 19 May, the Workers' Party described the bill as a "disturbing development" and accused foreign lobbies of pushing to roll back Algeria's re-nationalisation of its mining sector, which had been reinstated in 2014 after initial privatisation efforts in 2001. 

Meanwhile, the opposition Socialist Forces Front (FFS), Algeria's oldest progressive party, also rejected the bill, saying the proposed law "poses clear threats to national sovereignty and Algeria's mineral wealth." 

Algeria's aversion to foreign control in strategic sectors is rooted in its post-independence economic model. After gaining independence from France in 1962, the country adopted a socialist framework, with the state maintaining control over key industries. 

This legacy cemented a protectionist outlook, particularly in the hydrocarbons and mining sectors. The country's long-held 51/49 investment rule, which limits foreign entities to a 49 percent stake in joint ventures, has acted as a buffer against foreign dominance for decades. 

However, the government's current push to open up mining reflects a broader, if cautious, pivot in its economic strategy.

As Algeria faces mounting pressure to diversify its revenue streams and secure hard currency, it has begun signalling more openness to international capital.

Nowhere is this shift more visible than in the tourism sector. Historically underdeveloped due to political instability, strict visa regulations, and a heavy reliance on hydrocarbons, Algeria now seems to be making intentional efforts to reshape its image.

The government has equity relaxed visa restrictions, launched promotional campaigns, and introduced reforms to lure international travellers to its Saharan dunes and Mediterranean coastline.

Insiders say the ratification delay is to build broader consensus around the bill and reassure sceptics of the urgent need to attract foreign capital and technology into Algeria's mining sector.