Morocco Mining Report Q2 2009

Morocco Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Morocco's mining industry

The Kingdom of Morocco, with coasts on the Atlantic as well as the Mediterranean, is home to over 90 mining companies producing 20 different mineral products. The economically vital mining sector is dominated by phosphates, which account for 92% of mineral production. Other metals and minerals – including lead, zinc, copper, iron, fluorine, silver, manganese, cobalt, antimony and salt – are also beginning to grow in significance. Silver is produced in substantial amounts and is primarily sourced from the Imiter mine located in the Oriental Anti Atlas. Morocco also hosts cobalt at the Bou Azzer deposit, which is the world’s only primary cobalt deposit.

Meanwhile, a wave of new investment should result in significant improvements to Morocco's physical infrastructure over the coming years which will benefit the mining sector. The new government, which came into power in October 2007, has announced plans for a high-speed rail link connecting the northern city of Tangier with the commercial capital Casablanca. The MAD20bn project should be completed by 2013, with the possibility of an extension to Marrakech by 2015. Meanwhile, there are plans to develop the deepwater port located on the south bank of the Strait of Gibraltar

However, the falling prices of commodities are having a negative impact on the Moroccan mining sector.

In January 2009, Reuters reported that Managem – a subsidiary of industrial conglomerate ONA – was expecting a net loss for 2008. According to the company, it will lose approximately MAD600mn (US$69.3mn) for the year. The primary cause has been the steep decline in prices for Cobalt. Prices for the metal fell by approximately three quarters in 2008, causing Managem to lose MAD350mn (US$40.6mn). Meanwhile, costs of raw materials such as sulphuric acid also hit company profits. As a result of the performance, the company is looking to cut production costs at all of its businesses in 2009, which is estimated to bring in an additional MAD200mn (US$23.3mn).

The Office National des Hydrocarbures et des Mines (ONHYM) is the primary agency responsible for the exploration and promotion of national mineral resources. The other major state-owned organisation governing the mining industry is the Bureau de Recherches et de Participations Minières (BRPM), which is responsible for the development of most minerals found in Morocco. All mineral resources are the property of the state, which issues permits and licences for the exploration and exploitation of the resources. The current mining legislation in Morocco is based on the Mining Law (1951) and is enforced through executive orders and the Directorate of Mines. Under the law, a mining company may set up a tax-exempt reserve fund of up to 50% of the fiscal profits for exploration and development investment.

Global overview

On page 7 of this report, BMI examines the phenomenon of increased Chinese activity in the global mining sector and what this means for the industry moving forward.

Industry Forecast

Morocco’s zinc mining output is expected to decline in the coming years. Lead and silver outputs are also expected to go down. However, there is a strong opportunity for tin, with demand coming from the expanding electronics industry. The sector has also been helped by a ban on lead solder by the US and EU, increasing demand for tin solder. Also, current global production levels of tin are declining, while there are few new developments of any scale. Morocco with its Achmmach site has some of the largest untapped reserves of tin in the world.

Despite the declining prices for commodities and falling output on a local level, BMI expects the Moroccan mining sector to grow at a slow but solid pace over the forecast period. Between 2008 and 2013 we expect the compound annual growth rate (CAGR) to stand at 2.49% in local currency terms, although we forecast a slight decline in US dollar terms. The industry value is expected to be worth US$1.10bn in 2013, contributing around 1.1% to the nation’s GDP. SHOW LESS READ MORE >

Executive Summary

Special Focus: Outlook For Global Mining
Table: Biggest Chinese Acquisitions In Australia Since 2005
Table: Global Mining – Top Five Companies By Market Capitalisation (US$mn)
Table: Global Mining – Key Players’ Future Investment Plans (selected projects)

Industry Trends And Developments
Overview
Table: Mines In Morocco
Latest Developments
Regulatory Structure And Developments

Key Projects
Gold
Copper
Tin
Uranium
Diamonds

Business Environment
Regional Overview – Africa
Table: Africa Mining Business Environment Ranking
Limits Of Potential Returns
Risks To Realisation Of Returns

Political Environment
Domestic Politics

Industry Forecast Scenario
Metals Price Outlook
Table: Stock Levels At London Metals Exchange Warehouses (tonnes)
Global Industry Overview
Regional Analysis
Morocco – Mining Industry Forecast
Table: Morocco Mining Industry Data and Forecast, 2006 – 2013

Competitive Landscape
Table: Morocco Mining – Key Players

Company Monitor
Managem
Odyssey Resources
Metalex Ventures
Kasbah Resources

Appendices
Appendix A: Global Assumptions
Global
Table: Global Assumptions, 2007-2013
Economic Activity
Table: Global And Regional Real GDP Growth, 2006-2012 (% change y-o-y)
Table: Developed States’ Real GDP Growth, 2008-2010
Table: Emerging Markets’ Real GDP Growth, 2008-2010
Monetary Policy
Table: Developed Market Exchange Rates, 2006-2010 (average)
Table: Emerging Market Exchange Rates, 2006-2010 (average)
Commodities
Appendix B: Business Environment Methodology
Ratings Overview
Table: Mining Business Environment Indicators
Table: Weighting Of Components

- Managem
- Odyssey Resources
- Metalex Ventures
- Kasbah Resources