Rabat- The growth of Moroccan mining sector has maintaind a steady pace in BMI Research Group Mining Risk/Reward Index (RRI), after clinching second place in the MENA region once again, owing to Morocco’s well-established mining industry.
In its latest industry trend analysis, BMI, a Fitch Group company, presents its outlook for the Middle East & North Africa mining sector, making the use of BMI’s Risk Reward Index, which provides investors, mainly mining companies and support service providers, with a clear country-comparative assessment of a market’s risks and potential rewards.
With an overall Mining RRI score of 56.3 out of 100, BMI ranked the Moroccan mining sector as the most attractive market in the MENA region, after Saudi Arabia. The Gulf country maintains the top position in the MENA region with a score of 59.5 out of 100, due to its growing gold, copper and phosphate sectors, as well as its well-established and clear mining regulatory code and stable operating environment.
According to the research firm, Morocco’s performance is supported by its established mining industry, which makes it a top global producer of phosphates, in addition to modest volumes of gold, silver, zinc, copper and cobalt, boosting its score in the “rewards” category to 49.9 out of 100.
According to Morocco’s Ministry of Energy and Mining, the sector plays a major role in the country’s economy, as it contributes by 21 percent of the value of export remittances and employs about 39,225 people.
“For centuries, mining has been one of Morocco’s most practised economic activities. Moroccan mining technologies, like copper works and steel manufacturing, were exported abroad, particularly to Europe.
“Since the beginning of the twentieth century, major manganese, iron, zinc, lead and phosphate fields were discovered. The strongest point of the Moroccan industry is phosphate mining,” the Ministry states.
The firm also attributes the country’s performance to the mining code of Morocco which was updated in 2015, to increase legal clarity and encourage foreign investment. BMI points out that although the key phosphate sector is dominated by state-run companies, joint-ventures with private firms are increasingly common and foreign firms are allowed to operate non-phosphate mines.
In fact, Morocco’s newly privatized mining industry allowed the Canadian international mining exploration company, Maya Gold & Silver, to initiate joint venture with National Office of Hydrocarbons and Mines of Morocco, to explore and develop gold and silver deposits in the country.
Over the first three quarters of 2017, the company reported the production of 384 thousand ounces of silver at the Zgounder mine, located approximately 260 kilometers east of the major port city of Agadir.
The report adds that Morocco’s relatively stable operating and political environment accounts for the solid “risks” score of 60.4. However, the research firm mentions the series of protests which began late December 2017, following the death of three local miners, while mining the underground tunnels of an abandoned coal mine in the eastern city, Jerada. BMI believes that the incidents carry significant negative risks to the sector’s outlook.
Despite the country’s high ranking, BMI places the MENA region as a whole towards the lower end of the scale, ranking fourth among five regions, with an average score of 47.9. The firm forecasts that the region will continue to perform relatively poorly in the coming quarters.
“The countries’ underdeveloped mining sectors, dominated by state-owned players, and ongoing political risks will see limited improvement in the near term,” the report concludes.