Boston, MA -- (ReleaseWire) -- 09/06/2012 -- The indicators point to strong growth in Moroccan mining production and revenues in 2012 with export revenues from phosphate shown to have increased by 15.7% y-o-y in the first four months of the year. Overall, real growth in mining is forecast at 5% y-o-y in 2012 before falling to an average of 3.1% y-o-y over our 2012-2016 forecast period. While phosphate is set to continue to be the main driver of growth, we note significant expansion in the development of non-core minerals such as tin.
Phosphate Flourishing After Twin Investment
In May the African Development Bank (ADB) provided a further boost to Morocco's phosphate industry with the announcement of a US$250mn to the government to help develop the sector. The funds will be used to help construct a processing facility at Jorf Lasfar - a port 110km south west of Casablanca - which will turn raw phosphate into fertiliser and phosphoric acid. The loan agreement is part of the ADB's wider strategy to develop agriculture and increase food security across the continent.
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Funding provided by the ADB comes on the back of a major investment drive by state-owned mining firm Office Cherifien de Phosphate (OCP). The company has pledged to invest US$8.8bn in developing Morocco's phosphate industry between 2010 and 2020 as it seeks to expand the country's total production to 47mnt a year by 2020. The expansion should see Morocco cater to growing demand for fertilisers from Asian and African markets. OCP is also invested in developing a new EUR90mn phosphate terminal at Jorf Lasfar. The port is home to OCP's chemical complex and is a major terminal for exports of sulphur, phosphates and fertilisers.
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 bottom of our Business Environment Ratings for the African mining industry with a score of 34 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.
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