Egypt's Orascom Construction Industries said Algerian subsidiary Sorfert had signed a deal with Germany's Uhde to build a $1.7 billion fertiliser production plant in Algeria.

A statement on the company's Web site (orascomci.com) said Uhde, ThyssenKrupp's plant engineering unit, would build the plant in Arzew, near the western coastal town of Oran.

The plant will consist of an ammonia/urea production unit with a capacity of 1.1 million tonnes per year and a second ammonia production unit with a capacity of 770,000 tonnes per year, the statement said.

'The project is now on track to be Algeria's largest fertiliser producer and geared to be a major exporter on the Mediterranean,' OCI chief executive Nassef Sawiris said in the statement.

OCI owns 51 per cent of Sorfert, and the remaining stake is owned by Algerian state energy firm Sonatrach.

The plant will begin operating by the end of 2010 and reach full production capacity six months later, the statement said.