Morrocan economy has positive outlook for future

Positive outlook

Morocco has been able to create a low middle class by bringing more and more people out of poverty. By comparison with Algeria and Tunisia, a larger proportion of the Moroccan population lives below the poverty level, but the Moroccan officials have tolerated the existence of what is termed a “parallel economy” that employs large segments of the poor, and in particular the young and educated. While this results in the loss of billions of dirhams through tax evasions on undeclared revenues, the government considers it worth the price to appease some of the population and opt for social peace. The question is, how long can this be sustained?

The tax measures contained in the November 2010 finance bill are designed to attract further foreign investment and to encourage small companies to enter into the formal economy. In a bid to draw in additional foreign direct investment (FDI), the government is launching several major construction projects and has set aside US$14.8 billion for improving transport and infrastructure. On the domestic front, the residential and non-residential sectors are benefitting from low interest rates, private investment and the government’s social housing programme, stimulated by fresh tax benefits on home builders introduced in the previous budget (2010).

Cement demand increases

In the past few years there has been an increase in cement activity with new plants being established, new lines coming onstream or through upgrades. Cement capacity in 2010 was estimated to have been 18.8 million t. Consumption in 2011 is expected to increase by up to 6% on the figure for 2010, fuelled by a strong construction market and a dynamic real estate sector, including social housing. There has been full utilisation of cement plant capacity over the past four years, with the recent high domestic demand resulting in a sharp fall in exports. The cement sector has enjoyed buoyant growth in recent years, having benefitted from big infrastructure projects such as the deepwater port on the Mediterranean, the development of six tourist resorts, important housing programmes, and the construction of roads, dams and power plants.

 Lafarge Maroc, Ciments du Maroc (Italcementi), Holcim Maroc and Cimenterie Asment de Témara (Cimpor) were the four major players in the country until 2007 when a new independent player entered the market, Ciments de l’Atlas (Cimat). In April 2008, it awarded Polysius SAS, France, the contract to build two greenfield cement plants at Ben Ahmed in Settat Province and at Béni Mellal. The capacities of each are 3600 tpd. The Ben Ahmed plant was scheduled to produce its first clinker in December 2010, while the other plant is set to come onstream in June of this year. When fully operational, the company’s total capacity will be 3.2 million.

Last year the Lafarge group stated that it had begun a feasibility study on the possibility of building a new plant in the southern Souss region. In May 2004 the company opened a new 1 million tpa plant at Tetouan to meet the growing demand in Morocco’s northern provinces, and two years later it inaugurated a second production line (900 000 tpa) at its Bouskoura plant. In addition to these two plants, Lafarge Maroc, a 50% subsidiary of Lafarge held in partnership with Société Nationale d’Investissement (SNI), operates two other plants at Tangier and at Meknes.

In 2008, Holcim raised 1.5 billion dirhams (US$186 million) in a bond sale to double capacity at its Fez plant, 100 miles northeast of the capital Rabat. Production will be increased to 1.2 million t by 2012. Holcim Maroc’s two other plants are located in Oujda and in Settat.

Ciments du Maroc (Italcementi Group) operates three cement plants in Agadir, Safi and Marrakech. At the beginning of 2007, the company announced a e280 million investment to build a new 2200 tpd cement plant in Ait Baha that will replace the Agadir plant, which is located about 50 km away. This will increase the facility’s production capacity to 2 million tpa. The Italcementi Group has confirmed that investments are being implemented to improve the efficiency of the Safi and Marrakech plants.

Elsewhere, Asment de Témara (Cimpor) recently installed its third cement mill. It is rated at 50 tph and will allow the grinding capacity to increase by over 400 000 tpa.

Author: Paul Maxwell-Cook, Managing Editor, World Cement

Read the article online at: https://www.worldcement.com/africa-middle-east/01032011/morrocan_economy_has_positive_outlook_for_future/