Berlin: Germany`s defence group Rheinmetall and Ferrostaal industrial group are due to sign a deal with Algeria soon for nearly 1,000 armoured personnel carriers and a factory, a media report said Wednesday.
Business daily Handelsblatt said the contract, set to be signed in the coming weeks, was for 980 Fuchs (Fox) 2 vehicles worth a total of 2.7 billion euros ($3.7 billion).
"For the first time Germany is delivering not only armoured personnel carriers to an authoritarian state but also a complete vehicle factory," the newspaper said.
Contacted by AFP, Rheinmetall and Ferrostaal declined to comment.
The contract would be part of a wider agreement between Algeria and Germany, valued at 10 billion euros, to include delivery of two frigates by ThyssenKrupp and industrial vehicles by Daimler, Handelsblatt said.
The spokeswoman for the economy ministry said Chancellor Angela Merkel`s previous centre-right government had given a green light for defence collaboration with Algeria in 2011.
Berlin saw no reason to call into question discussions that could lead to the Algeria deal, the ministry added, despite criticism of the government for selling arms to countries with questionable human rights records.
Algeria has pledged not to sell on the 120 vehicles produced annually on its own soil to other countries.
Merkel`s government has in the past approved controversial arms shipments to Saudi Arabia, Qatar and the United Arab Emirates.
For decades, Germany had declined to sell heavy weapons to Saudi Arabia because of concerns over human rights and fears for Israel`s security.