New Materials research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/16/2013 -- Executive Summary
For Q113, we are sticking with our existing forecasts for Morocco's mining sector. We expect growth to speed-up in 2013 as a result of new phosphate fertilizer plants in the country, rising to 8.2% y-o-y. We expect growth to average 3.6% y-o-y from 2012 to 2017 reaching US$1.61bn by the end of the period. For 2017, we are forecasting a conservative growth rate as it remains to be seen how the effect of Saudi Arabia's large investments in phosphate production capacity and China's drive towards self-sufficiency in key raw material inputs will affect Morocco's mining prospects.
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Export Production Growth To Come From Saudi Arabia and Morocco
The vast majority of capacity additions in the coming years will be coming from Saudi Arabia and Morocco. Ma'aden in Saudi Arabia began DAP production in 2011 and will reach the steady-state production rate of 3mnt DAP by 2013. As mentioned in the previous section, OCP will also be adding significant new capacity to the market between 2013 and 2015. As producers from Saudi Arabia and Morocco generally sit on the left side of the cost curve, some high-cost capacity (typically Chinese producers) who do not have access to lower-cost rock, may be displaced.
Bucking the trend in mined minerals and metals, the fertilizer market was strong in 2012 as food and agriculture remain key needs in the global economy. Despite the sharp downturn in Chinese demand for bulk and base metals, strong demand for fertilizers, delayed expansion projects and announced plant closures led to a strong year for phosphate producers. We do not expect this market tightness to continue though as additional supply from Saudi Arabia and Morocco ramp up to full capacity. Global phosphoric acid production is expected to reach 43mnt by 2015.
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, although the situation should see improvement through the expected introduction of a new mining code in 2013. Morocco currently ranks fourth from the bottom of our Business Environment Ratings for the African mining industry with a score of 43.2 out of 100. Outside of phosphate where the state has a monopoly, the country's mining industry is virtually non-existent.
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