Renault to sign Algeria factory deal on Wednesday

PARIS Tue Dec 18, 2012 1:11pm IST

Rain drops are seen on the logo of Renault car parked in front of French car manufacturer dealership in Paris, November 2, 2012. REUTERS/Christian Hartmann

Rain drops are seen on the logo of Renault car parked in front of French car manufacturer dealership in Paris, November 2, 2012.

Credit: Reuters/Christian Hartmann

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PARIS (Reuters) - French carmaker Renault (RENA.PA) will sign on Wednesday an agreement to build its first factory in Algeria, a spokeswoman told Reuters, confirming a report in daily newspaper Le Figaro.

The agreement will coincide with a visit to the country by French President Francois Hollande and will be signed by the group's regional manager, Jean-Christophe Kugler, and Algeria's industry minister, the spokeswoman added.

Le Figaro said in a preview of its Tuesday edition that Algeria would own 51 percent of the factory, with Renault holding the rest.

Renault had said last week its framework deal with Algeria was making progress but was yet to be finalized, following a memorandum concluded in May.

The agreement provides for construction of a plant to serve the local market, which expanded 46.5 percent in the first half to a total of 225,000 vehicles.

Hollande's visit to the North African country is also likely to raise a potential Algerian investment in struggling French automaker PSA Peugeot Citroen (PEUP.PA), a diplomatic source said last week, confirming a report on La Tribune's website.

With France's own economy spluttering, Hollande will bring senior executives from some of France's top firms including oil major Total (TOTF.PA), which is vying to sign a $5-billion-deal to build an ethane steam-cracking plant.

With 12 billion barrels of oil reserves, Algeria is the world's largest Francophone nation, yet annual trade with its one-time colonial master is just 10 billion euros.

Paris and Algiers are also likely to ratify a defense agreement that would allow French defense contractors to bid for major arms deals, a market closed to France until now. That should improve intelligence cooperation as international efforts to oust al Qaeda-linked Islamists from neighboring Mali gain momentum.

(Reporting by Gilles Guillaume; Writing by Elena Berton; Editing by Christian Plumb and Mark Potter)

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