The South Korean government signed a deal with Algeria on Monday to build a new town near Algiers, the capital of the North African country, officials said.

Under the agreement, a consortium of five South Korean builders will construct a new town in Buinan, a city 30 kilometers south of Algiers, the Ministry of Construction and Transportation said.

Ground will be broken in July this year for the town, which is scheduled to be completed in 2011, it added.

The agreement was concluded as a follow-up on South Korean President Roh Moo-hyun's visit to Algeria in March last year, a ministry official said.

The project, worth 2 trillion won (US$2.1 billion) to 3 trillion won, is expected to step up economic cooperation between the two countries, he added.