The Moroccan mining sector may be set for a boost in 2011 subsequent the news that the country’s major conglomerates - Groupe ONA and parent company Société Nationale d’Investissement (SNI) - are planning to join, again delist from the local stock exchange and again look to divest majority stakes in key subsidiary companies. Part ONA’s companies are diversified miner Managem and steel maker Sonasid. ONA and SNI delisted from the stock exchange in August 2010, at the same time as the companies bought back some US$1.2bn-worth of shares.

•     Morocco is a net hydrocarbon importer. The country produces marginal amounts of crude oil, natural gas, and refined petroleum products, which is mainly consumed domestically. Morocco has two oil refinery with a total crude oil distillation capacity of nearly 155,000 barrels per day (bbl/d).
•     Morocco produced 5,100 bbl/d of crude oil in 2012, up only slightly over the completed decade from 3,700 bbl/d in 2003. Dry natural gas production in Morocco has been relatively steady over the completed decade, with 2 billion cubic feet (Bcf) produced in 2011.
•     Recently there has been increased interest in upstream activities, largely because Morocco is believed to hold untapped shale resources, and the country as well offers favorable fiscal terms for foreign investment in the energy sector.
•     With most of its energy needs met by importing hydrocarbons, Morocco wants to reduce its dependence on foreign imports by developing renewable energies to meet domestic electricity needs. The national-owned Office National de l\'Electricite (ONE) plans to harness solar and wind energy to generate about 42 % of the country\'s electricity need by 2020, according to the Arab Oil and Gas Journal.
•     A portion of the Maghreb-Europe Pipeline (as well known as the Pedro Duran Farell pipeline), which transits natural gas between Algeria and Spain, passes through Morocco. In lieu of transit fees, Morocco receives around 21 Bcf of natural gas from the Europe Maghreb Pipeline Limited each year.
•     According to a recent EIA study, Morocco has 20 trillion cubic feet (or 0.2 billion barrels) of technically recoverable shale oil and gas resources, mostly in the Tindouf basin, with smaller amounts in the Tadla basin.
   

The initial companies possible to be divested are sugar maker Cosumar, food manufacturer Lesieur and dairy concern Centrale Laitiere. Presently, no tangible data on next divestment plans for any mining concerns has been forthcoming. However, the intention of ONA seems to be to move away from having a hands-on management role in its subsidiary companies and to allow foreign partners to gain a stake. In 2009, ONA saw net gain increase to MAD2.92bn (from MAD1.12bn in 2008), while revenues as well climbed, by 1.9%. Helping the group’s performance was a reduction in the losses made by mining concern Managem, which benefited from a recovery in metals prices, plus higher production levels, according to a statement on Reuters. BMI will monitor the situation over the coming months to see if any new mining sector investment opportunities present themselves.

Odyssey pulls out of Morocco

In August 2010, Canadian company Odyssey Resources announced that it was terminating its copper investigation activities in Morocco. To that end, it will presently seek to liquidate its Moroccan subsidiary and not pursue the regeneration of its mining licences in the kingdom, which expired in July 2010. The company cited disappointing investigation results and what Odyssey described in a press release as ‘the company’s inability to find a suitable solution to continue its work on this project’ as reasons for pulling out of Morocco.

New company profile

In August 2010, Maya bought out its prospective joint venture partner Société d’Exploration Géologique des Minéraux (SEGM). This means that Maya presently holds a 100% interest in the exploitation permits and exploration permit for the Amizmiz gold and silver project, covering an area of 80km2.

Country Overview

The Kingdom of Morocco’s economically very significant mining sector is dominated by phosphates, which accounted for some 93% of mining production in 2009. This industry is as well dominated by national-run OCP. Beyond phosphates, the country as well produces manganese, lead, zinc, copper and cobalt.

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 national-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 national, which issues permits and licenses for the investigation and exploitation of the resources. The present 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 .

Industry Forecast

We are broadly favorable on the outlook for Morocco’s mining sector over our expect period to 2014 and we project an average annual increase rate of 4.13%. In particular, tin may prove to be an increasingly significant commodity for Morocco, if Kasbah Resources decides to commission a mine at Achmmach in the years ahead..