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Morocco Mining Report Q4 2012
Business Monitor International, November 2012, Pages: 57
In Q412, we are sticking with our existing forecasts for Morocco's mining sector. By the end of 2012 we project the value of the country's mining sector to have reached MAD11.65bn (US$1.35bn), representing an increase of 7.1% year-on-year (y-o-y) in real terms. Growth is expected to quicken in 2013, rising to 8.2% y-o-y. We expect growth to average 4.7% y-o-y over the course of our 2012-2016, medium-term forecast period, with the sector reaching a value of MAD13.91bn (US$1.58bn) by the end of the period.
BMI notes that the relative value of Morocco's mining sector is set to remain low, with the total value of the industry estimated at 1.26% of the country's GDP in 2011 and expected to rise to 1.44% in 2013,
before returning once more to the 1.26% level in 2016.
Phosphates Faring Well
Moroccan exports of phosphates look to be a bright spot in the country’s export landscape. According to a report released by the Moroccan Central Bank in August 2012, the country recorded a trade deficit of 7.1%, or MAD100bn (US$10.3bn), in H112. The bank attributed the deficit to an increase in import costs,
relating to higher prices for energy and raw materials, coupled with the effects of a slowdown in the European economy and fewer remittances from Moroccans working abroad.
However, exports of phosphates were shown to be performing well, which BMI believes is in large part down to the growth of exports to emerging markets in recent years. Morocco's Foreign Exchange Office
(FEO) announced a 15.7% growth in revenues from phosphate exports in the first four months of 2012,
with income totalling US$479.5mn during the period. In particular, exports of phosphates and derivative products to India, one of Morocco's fastest growing trading partners, are shown to be increasing and made up a significant proportion of the US$1.6bn in bilateral trade between the two countries in 2011.
Morocco has a well-developed mining industry. However, the majority of the industry remains under state control, which acts as a major limitation on potential opportunities for foreign investors. In addition,
an inefficient tax regime and under-developed labour infrastructure also act as constraints on growth,
although the situation should see improvement through the expected introduction of a new mining code in 2013. Morocco currently ranks third bottom of our Business Environment Ratings for the African mining industry with a score of 43.1 out of 100.
On the positive side, energy and transport infrastructure is improving, following recent investments.
Furthermore, the state provides mining investors with a safe operating environment alongside security of investment. Also there are a number of incentives for mining companies. These include a 50% reduction in tax for miners that export their products. There are also exemptions on customs duties and some tax exemptions for imported equipment.
Mining activity in Morocco is dominated by state-run OCP and other state-run concerns such as ResidInvest and Managem. Managem subsidiary Société Metallurgique d'Imiter (SMI) operates the Imiter silver mine, the ninth-largest silver mine in the world. However, there is also a burgeoning private sector with foreign players leading the way in exploration for tin, gold, diamonds and other smaller mineral groups. The most important operators include Kasbah Resources, Maya Gold & Silver and Metalex Ventures.
Executive Summary 5
SWOT Analysis 7
Morocco Political SWOTs 7
Morocco Economic SWOTs 8
Morocco Business Environment SWOTs 9
Global Mining Outlook 10
Table: Recent Tax Increases 14
Table: Largest Coal Projects 16
Table: Major Frontier Mining Projects 17
Africa Mining Sector Outlook 18
Table: Recent Government Intervention 19
Industry Trend Analysis 23
Table: Morocco – Mining Industry Value & Phosphate Production, 2009-2016 25
Industry Forecasts 26
Phosphates: Export Diversification Bears Fruit 26
Table: Morocco - Phosphate Production, 2009-2016 27
Regulatory Developments 28
Africa Risk/Reward Ratings 30
Table: African Government Intervention 30
Table: Africa – Risk/Rewards Ratings 31
Competitive Landscape 35
Table: Key Players In Morocco's Mining Sector 35
Company Profiles 36
Kasbah Resources 36
Maya Gold & Silver 38
Metals Commodity Price Forecasts 40
Monthly Metals Update 40
Aluminium: Support At US$1,800/tonne Likely To Hold 41
Copper: Relative Outperformer But Still Weak 43
Iron Ore: Don't Bet On A Sustainable Recovery 45
Lead: Potential For Short-Term Rally 47
Nickel: No Turnaround Coming 48
Steel: More Pain Ahead 49
Tin To Outperform 50
Zinc: Little Room For Optimism 52
Table: Select Commodities – Performance & BMI Forecasts 53
Business Environment Ratings Methodology 54
Table: Mining Business Environment Indicators 55
Table: Weighting Of Components 56
Maya Gold & Silver