Mining is big business in Morocco, but as the country’s role grows, should mined materials be exported or turned into high value products?
Rabat – A mining boom could benefit more than just exports if Morocco can advance the production of value-added products. Shedding the legacy of colonialist resource exploitation, Morocco could expand its position in supply chains and better profit from its natural assets.
The country has 75% of the world’s estimated reserves of phosphate and is growing its share of barite, cobalt, and other important minerals. The world relies on countries like Morocco to supply the global community with such minerals. These raw materials are necessary to produce mobile phones, make fertilizer to grow crops, and produce steel for cars and buildings. Reserves for important materials for high-tech products like computers and cell phones are not available in Europe and the United States.
Instead Western countries rely on often unstable countries such as the Democratic Republic of Congo, where conflict and poor infrastructure make business difficult and often unethical. Morocco presents a stable and market-friendly alternative.
New reserves are available in Morocco, and the country’s mining industry is set for a boom for decades to come. But mining is a dirty business and it is important Morocco extracts the maximum revenue from its precious resources.
Raw materials versus value added products
In order to truly benefit from Morocco’s rich resources it is important to consider what the country does with the materials it extracts through mining. There are two options currently available. Morocco can extract the materials and sell them abroad for quick returns, or the country can produce high value products for national and international consumption.
The extraction and export of raw materials is a vestige of colonialism. For centuries Western countries would extract raw materials from their colonies. They would ship these materials to their home country where local companies would turn them into high value products. They would then ship these products back to the colony and sell them for a significant profit.
The cycle continues today. When a Moroccan family buys a German-made Volkswagen automobile, most of the materials used to make the car did not come from Germany. Yet the German company makes the largest profit as it produced the final “value added product.” In order to create the maximum number of jobs and economic benefits, a country needs to produce the final product, not just export the materials for it.
Jobs and profits
An example of this practice in Morocco is evident with phosphate exports. Morocco exports phosphate to India at prices set by the global market. India turns this phosphate into vital fertilizers for food production, which becomes the final “value added product.”
Because Morocco has so much of the world’s reserves of phosphate, it could choose to instead limit its raw exports and produce fertilizer that is “Made in Morocco,” selling it abroad for higher profits. Moroccan business is already doing this to some extent, but a renewed government focus on owning the production of value-added products could gradually turn Morocco into a powerful economic player.
Investment and a long-term vision are necessary to build the knowledge and expertise to turn cobalt, iron ore, and gold into components for mobile phones. By prioritizing knowledge building and manufacturing expertise now, Morocco could position itself as a manufacturing country instead of an exporter of raw materials. Manufacturing creates jobs, attracts foreign investment, and can drag millions out of poverty, just as it has in China over the last decades.
By turning Moroccan mining riches into expensive products for export, Morocco can emulate much of China’s success with even greater benefits, as China greatly depends on imports for its production. All it will take is a sense of self-confidence in Moroccan abilities and a solid long-term vision to turn the country into a high-tech manufacturer on which the rest of the world can depend.