Morocco’s new laws set to spark growth
Long respected for its integrity among mining executives, Morocco is enhancing its attractiveness by enacting sympathetic legislation. Michael Schwartz reveals the country’s ambitions.
Mining analysts follow with interest the annual Fraser Institute survey of senior mining executives – for 2015 nearly 4,000 of them ranked 109 mining administrations by such factors as investment attractiveness and mineral potential. Morocco was rated 24th for both factors – the highest in Africa for investment attractiveness. It beat not only Burkina Faso (29th) but also the traditionally most trusted African country, Botswana (39th).
Morocco’s Government takes a major role in the country’s mining sector. For example, the state-owned l’Office Chérifien des Phosphates (OCP) undertakes the mining and beneficiation of phosphates – US Geological Survey provisional figures show that China mined 100Mt of phosphates last year, with Morocco placing second at 30Mt (the USA was third with 27.6 Mt). All minerals are the property of the Government, which issues permits and licences for exploration and exploitation via the Ministry of Energy, Mines, Water and the Environment.
There is a general distinction in Morocco between mined and quarried commodities, the state owning the former and the owner of the surface rights the latter. When it comes to phosphates, however, the state retains a monopoly on exploration and mining.
An amendment of the legislation will make it more user-friendly. There will be three types of mineral licence:
large-scale regional exploration permits valid for 10 years initially and rectangular in plan although with no upper limit research permits, typically measuring 4km x 4km
mining permits allowing mining subject both to an annual fee not specified in the legislation and to the permit-holder being Morocco-registered. Surface rights are not automatically conferred.
The new legislation also introduces a licence for mining existing tailings and waste piles, again using rectangular boundaries and Moroccan registration. Additionally, and recognising the need for more sophisticated techniques in some areas currently exploited by artisanal miners, the new laws will remove restrictions on private investors while ensuring artisanal rights.
All in all, operators in Morocco have expressed satisfaction with working in the country. Mike Kitney, COO to Kasbah Resources, told Materials World, 'We have found the Moroccan administration to be very supportive of our endeavours to date, particularly at the local and provincial level.
'Employment and economic activity are key drivers at this level. Economic activity in the broader sense is key to the central administration in Rabat. The region in which the Achmmach project is situated is strongly supportive. However, there are regions elsewhere, in the south, for instance, where the local populace is less supportive of mining.'
Further endorsement comes from Maya Gold and Silver Inc, whose Investor Relations Manager Natalie Dion explains, 'In our case, the authorities see Maya not only as a partner (85%–15%) but also as an “ambassador”. There is good chemistry between the parties.'
Current mining operations
Control by the Moroccan Government of its major phosphates sector appears to have restricted foreign involvement. Indeed, major mines are run by
Managem, an extremely large mining consortium. They include:
El Hammam, 63km south of Meknes, in turn 150km due east of Rabat, Morocco’s capital. Starting in 1974, El Hammam produces 100,000t annually of fluorine concentrates used for aluminium and chemicals
Polymetallic mines at Hajar and Draa Sfar near Marrakech, producing zinc, lead and copper to annual totals of 65,000t, 20,000t, and 15,000t respectively
Bou-Azzer, 120km south of Ouarzazate in northern central Morocco, which produces 2,000t/y of cobalt
Imiter, very close to Bou-Azzer and generating 7.7Moz/y of silver
Akka, 280km south-west of Agadir, mining 22,500oz/y of gold and 9.5Mt/y of copper
Guemassa, a hydro-metallic complex also near Marrakech, which produces 99.3% pure cobalt cathodes, cobalt oxide, zinc oxide and sodium sulphate.
Maya Gold and Silver
Canadian-based Maya Gold and Silver Inc is both a mining and exploration company with strong ambitions for Morocco, and a growing number of precious and base metal properties in what it calls a 'relatively underexplored country'.
Dion explains, 'Since the first acquisition in Morocco in 2009, Maya has acquired a large pipeline of mining projects, including past-producing mines and high-potential exploration properties. In fact, Zgounder and Boumadine were the two most attractive mining projects owned by the State – Office National des Hydrocarbures et des Mines (ONHYM) – that went into an international call for tendering as part of this privatisation. Maya was well placed to reply to these tenders.'
Key to Maya’s success is the flagship Zgounder silver mine, which poured 46,270oz of silver ingots in May 2016. As this total came from 5,934t of dry material, average grades of 298g/t were achieved. In addition, the recovery rate of 82.54% was an increase of 4.8% over April, while pilot testing using flotation is generating 84% recovery. In discovery terms, 2.5m-thick copper-silver-gold fractures and veins are yielding average gold assay values of 6.85g/t and average silver values of 1,261g/t.
Zgounder is located 260km east of the port-city Agadir. Brinks carries silver ingots to Casablanca airport to be flown to Zürich where the responsibility for the ingots is transferred to the refiner. The ingots are then sold as a commodity.
Boumadine mine is accessible year-round via the town of Tinejad and by a dirt and gravel road. Its polymetallic deposit (gold, silver, zinc, lead and copper) lies within the Ougnat Proterozoic window in western Morocco. One advantage is that mineralisation extends 4km on the surface – underground zones can be at 350m depth. The Boumadine deposit is interpreted
with potential for copper-gold porphyry-type mineralisation at depth.
One area of similarity between Zgounder and Boumadine is royalties – 3% royalties on revenues are payable by both to ONHYM (there are no royalties to pay on a newly acquired exploration permit in Morocco). Also applying to both sites is corporate social responsibility (CSR), as Maya had to produce impact environmental studies before starting operations.
Redstone Exploration Services
Dr Mike Mlynarczyk is Principal of Redstone Exploration Services of Krakow, Poland. His substantial experience of Morocco provides answers to many questions.
Regarding artisanal mining, Dr Mlynarczyk confirms, 'It is certainly ubiquitous with many small local operators (villagers, small miners) all over the country digging small lead or copper veins, or barite, gypsum, iron ore, fluorite, and selling their stock to middlemen who then export it to China and elsewhere. In fact, one zone in southern Morocco, referred to as the Cadetaf zone, was restricted to artisanal miners and off-limits to juniors/majors, but this has changed with the new law […] Mineral resources are spread all around the country at more than 2,000 prospects and deposits, with some close and others very remote from road/rail infrastructure. Nevertheless, locals manage to get nearly anywhere on a mule or via dirt track.'
Tin is yet another important mineral found in Morocco – Kasbah Resources Limited, an Australian-listed mineral exploration and development company, is advancing the Achmmach and Bou El Jaj (BLJ) tin projects. Indeed, Kasbah’s prime commodity focus is tin. Its objective is to become a significant producer of high-quality tin concentrates.
Kasbah owns the exploration and mining rights for Achmmach, which occupies 32km2 in the northeast part of the central plateau of the Atlas Mountains. This area is sparsely populated, but some families will still have to be resettled. The nearest city is Meknès, 150km due east of Rabat (facilities on site cover 55ha, or 1.7% of the total concession area).
In 2006, Kasbah entered into a JV with the National Office for Hydrocarbons and Mining (ONHYM) to further explore the deposit – estimates are that the deposit comprises 15.3Mt of tin-bearing ore at 0.85% tin grade, representing 130,000t of contained metal. In 2007 Toyota Tsusho Corporation (TTC) and Nittetsu Mining Co Ltd (NMC) of Japan became project level strategic partners at 20% and 5% respectively.
Since then, 130,000m of diamond drilling has been achieved at Achmmach. In March 2015, Kasbah completed anenhanced definitive feasibility study, integrating a high-grade western zone into Achmmach overall. Results are longer mine-life, lower pre-production capital costs, and significantly lower cash costs, down to US$13,296/t of tin in concentrate.
BLJ, owned exclusively by Kasbah, lies 15km from Achmmach. Its potential comprises satellite ore-bodies generating supplementary feed to a processing facility at Achmmach. BLJ differs from Achmmach in that it has a strong surface geochemical signature for tin. The initial 5,000m scout drilling programme at BLJ commenced in September 2012 and identified multiple shallow targets for resource definition drilling.
Kitney also spoke about the markets for Kasbah’s products, 'The Achmmach Project will likely produce primary tin concentrate grading 50–60% tin. This would find its way to tin smelters in both Asia and Europe. The principal downstream consumer of refined tin metal is electronic solder at about 55% of the global tin market.'
He also addressed royalties and CSR, saying 'Royalties are set by the central administration and are typically calculated on an ad valorem basis. It varies across the commodity spectrum and is 3% of net smelter return for tin.
To date, while in its exploration phase, Kasbah has contributed to the local rural community by constructing, improving and maintaining the local road network. It has also established water bores that have made it easier for the local farmers to water stock during the hot, dry summer months.
Kitney continued, 'The company has also contributed to refurbishing a local school through building repair and maintenance and improvement of sanitary facilities there, in addition to repairing a local community memorial site that suffered extensive storm damage one year. Finally, the company is engaged in a continuous forest development programme in the area of its activity.'
Morocco is currently enjoying an even higher than normal status among mining executives. With its recent review of its mining legislation it is set to attract greater investment within a trustworthy business environment.