The French carmaker Renault will tomorrow sign an agreement to build its first factory in Algeria, a company spokeswoman said.
The agreement will coincide with a visit to the country by the French president Francois Hollande and will be signed by the group's regional manager, Jean-Christophe Kugler, and the Algerian industry minister, the spokeswoman added.
French newspapers earlier reported that Algeria would own 51 per cent 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 finalised, following a memorandum concluded in May.
The agreement provides for construction of a plant to serve the local market, which expanded 46.5 per cent in the first half to a total of 225,000 vehicles.
Mr Hollande's visit to the North African country is also likely to raise a potential Algerian investment in struggling French automaker Peugeot Citroen, a diplomatic source said last week.
With France's own economy spluttering, Mr Hollande will bring senior executives from some of France's top firms including oil major Total, which is vying to sign a US$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 it is just Ä10bn.
Paris and Algiers are also likely to ratify a defence agreement that would allow French defence 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 neighbouring Mali gain momentum.