Steel titan ArcelorMittal (MT, MT.AE, MT.FR) and Algerian-stated-owned company Sider will boost steel production at their jointly owned Annaba steel plant to capitalize on rising steel demand in Algeria as auto makers open new factories.

ArcelorMittal and Sider said Monday they have signed an agreement to invest $763 million to more than double Annaba's steel production capacity to 2.2 million metric tons a year by 2017. The companies will also invest in the steel plant's associated Ouenza and Boukhadra mines which provide iron ore, a key steel making raw ingredient, to the plant.

The deal will see ArcelorMittal reduce its holdings in the steel plant and associated mines to 49% while Sider will boost its ownership to 51%. ArcelorMittal previously had a 70% stake in the two mines and steel plant. The investment plan will be funded with equity contributions from both companies and bank financing.

The investment is in line with the Algerian government's strategy to become self-sufficient in steel production given rising steel demand from car manufacturers that are moving to North Africa and building new assembly plants to take advantage of growing vehicle demand there.

French car maker Renault SA (RNO.FR) last year announced plans to build a car assembly plant in Algeria, its second in north Africa following the construction of a greenfield facility in Morocco that started production last year.

Annaba is the largest integrated steel plant in the Maghreb region. It produces hot and cold rolled steel, used to make cars and home appliances, and long steel products, which are used in construction. The plant has two captive iron-ore mines and a dedicated port that is linked by rail.

The two shareholders will invest in the blast furnace relining, the modernization of the sinter plant, and the steel plant and rolling mills at Annaba. The two shareholders are also investing in the construction of a new electric arc furnace and rolling mill for rebar and wire rod steel. The rolling mill will have a production capacity of 1 million tons a year.