Dubai: Emarat Dzayer Group, a Dubai-based diversified business conglomerate and Algerian Government-owned Groupe Imetal have signed an agreement to create a joint venture.

Emarat Dzayer Steel Company, in Algeria will produce 1.5 million tonnes per year of directly reduced iron (DRI) and 1 million tonnes of steel in the form of rails, steel structures and seamless pipes for $1.6 billion (Dh5.87 billion), Emarat Dzayer Group said in a statement.

The agreement was signed on Tuesday in Algeria, on the sidelines of the Algerian-Emirati Investment Forum in the presence of Shaikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister for Presidential Affairs, Abdul Malek Sellal, Prime Minister of Algeria, Abdeslam Bouchouareb, Algeria’s Minister of Industry and Mines, and other ministers and dignitaries from Algeria and the UAE, at a signing ceremony.

The project will create thousands of jobs and help substitute imports and help increase export earnings for the North African country, the company said in an emailed statement.

The agreement will create Emarat Dzayer Steel Company, a joint venture in which Groupe Imetal will hold 51 per cent stake through its two subsidiaries — Naftal (41 per cent) and Asimdal (10 per cent) — and the rest 49 per cent will be held by Emarat Dzayer Group.

The announcement is part of a series of ten agreements between Algerian and UAE firms, both public and private sector organisations, which creates a win-win situation for both the countries.

Emarat Dzayer Steel Company will produce 1.5 million tonnes of directly reduced iron (DRI) per year and 1 million tonnes of steel in the form of rails, steel structures and seamless pipes. The total cost of the project is estimated to be around $1.6 billion (Dh5.87 billion). The value added products of this plant will generate and save foreign exchange reserve, and thereby support the local economic growth.

The bilateral trade between Algeria and the UAE stood at Dh3.6 billion in 2015 and the UAE investments in Algeria amounted to more than $9 billion. Bouchouareb said the country is seeking to double the UAE investments to around $20 billion (Dh73.4 billion) in the medium term.

The technology will be sourced from highly specialised international technology companies from countries such as Germany, Italy, USA and Japan, and will generate jobs for local population.

The companies have also signed a second agreement for oil distribution with Naftal — a state-owned company for oil distribution and Asmidal — a government-owned manufacturing company for petrochemicals. The joint venture will set up a state-of-the-art manufacturing, blending and packaging facilities of lubricants and industrial lube oils catering auto, aviation, marine and industrial sectors. This project will be first of its kind in Algeria and will meet the growing local demand and will export to the Middle East and North Africa (MENA) region.