Morocco Mining Report Q3 2011

Countries covered: Morocco

Phosphates Lead Steady Growth In Output Morocco’s mining sector is set to enjoy average real growth of 2.74% year-on-year (y-o-y) over BMI’s forecast period from 2011-2015. The mining industry is forecast to reach a total value of US$1.43bn by 2015, an increase of 18% on its 2010 valuation.

Phosphates will continue to dominate mineral output over this period following recent upward revisions made to the country’s deposits, carried out by the International Fertilizer Development Centre, coupled with a steady increase in state investment in mining and freight transport facilities over the past few years. With no final full-year production data yet available from the Moroccan government, we estimate Moroccan phosphates output at 19.96mn tonnes in 2010, an increase of 9% from 2009. We forecast phosphates rock extraction to reach 28.32mn tonnes a year by 2015, marking an average annual growth rate of 8.4% over the forecast period. 

There is also growing international interest in developing a number of mining sub-sectors across the country. Among the materials attracting significant interest are tin, gold, diamonds and uranium. Much of the exploration work is being carried out by foreign firms. Increasing demand for tin, in particular, has drawn miners to the Achmmach deposit in El Hajeb province where pre-feasibility work is being led by Australian-based Kasbah Resources. Kasbah has a target of producing 4,000-6,000 tonnes of tin per year when operations begin. If this goes well, the company hopes to be producing tin in concentrate by 2013. In October 2010, Kasbah successfully raised AUD24mn via a share placement to fund its ongoing works at Achmmach and the company recently appointed a new Chief Operating Officer with the explicit brief of developing a feasibility study for the project.

Gold is another sub-sector with strong growth potential with prospecting currently being led by Canadian miner Maya Gold & Silver, which is developing the Amizmiz project in Marrakech province. Recent measurements have revealed deposits of 341,073oz of gold at the pit with extraction scheduled to begin from Q311. It was reported in February 2011 that the company is undertaking due diligence in preparation for the possible acquisition of five gold, silver and polymetallic projects in Morocco. Further information on both Kasbah Resources and Maya Gold & Silver is available in the Company Monitor section towards the end of this report.

Business Environment

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. Given these constraints, Morocco currently ranks last in our Business Environment Ratings for the African mining industry, with a score of 37 out of 100.

On the positive side, the country’s energy and transport infrastructure is improving, following a series of 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.

Key Players

Mining activity in Morocco is dominated by state-run Office Cherifien de Phosphate (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.