INDUSTRY I (CEMENT)

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This report appraises a Bank loan of US$46.0 million to help finance: (a) part of the ongoing expansion of the Societe Nationale des Materiaux de Construction (SNMC), the Algerian state enterprise for construction materials, through erection of a new 500,000 ton per year cement plant near Saida away trom the coast in the rural south; (b) the expansion of the company's distribution network; and (c) a technical assistance program to the Societe Nationale de Comptabilite (SNC), the state accounting and auditing company. If approved, the loan would be the Bank's first direct industrial operation since lending was resumed in FY1973. The prime purpose of the Bank loan lies not so much in its financial contribution of somewhat more than 20 percent of estimated project costs as in its effort at institution building in Algeria's building material sector. The project attempts to help SNMC cope with present and future organizational and financial problems created by an ambitious investment program which, between 1974 and 1980, is expected to require fixed asset expenditures in excess of US$2.0 billion and which aims at making Algeria independent in cement and some other building materials by the end of this decade. To this end, cement production is expected to increase from about 1.5 million tons in 1975 to about 8.0 million tons by 1980.