According to a report by Forecast International, the contract for the facility was given the go-head by the German government's Ministry for Economic Affairs and is worth $37 million.
The factory is reportedly part of an earlier $3.5 billion deal and will be located about 248 miles east of the city of Algiers. It will assemble nearly 1,000 vehicles from parts shipped to the country.
Included in the production will be Fuch armored vehicles, the report said.
The vehicles will be for Algerian use only.
In other Rheinmetall news, Forecast International said Rheinmetall plans on establishing a facility in South Africa that would develop various types of munitions.
Talks are reportedly being held with a potential launch customer.