Morocco

Morocco: Steel Industry Overview (2002)

As an emerging market with an average GDP annual increase of over 6% (drought years excepted), and a growing population, Morocco is now faced with a development dilemma. Priorities are becoming a real problem, as every sector of the economy needs investment. One of these “priority” sectors, where the need for investment is greatest is undoubtedly “metals”. The sector operators, who depend heavily on imports, classify “metals” as of strategic importance because the development of the country’s whole infrastructure is dependent on the availability of various “metals”. Roads, housing, dams, railways, etc, rely heavily on metals and steel. In recent years, Morocco has initiated a development policy based in the main on 4 ambitious programmes:

a)- Building 200,000 low cost houses ( a recent study showed that the country has a deficit of over 3 million houses if shanty towns are to be eradicated).

b)- Dam construction, where Morocco has been building one dam per year until 2002 and plans to build 2 dams per annum from 2003 until 2010.

c)- Roads and highways. Morocco has initiated a programme to build 10,000 kilometers of roads and 1,000 kilometers of highways by 2010.

d)- Tourism development. Morocco plans to accommodate 10 million tourists by the year 2010. In order to accomplish this task, the Government, with the help of World Bank financing, identified 6 new tourist sites. They have introduced special initiatives for the purchase of land, as well as for conducting feasibility studies, for those investors interested in the plan to provide 80,000 additional hotel beds.

This sector has become a priority because Morocco is keen to see these projects realized within the target of complying with W.T.O. regulations on liberalization and also, in preparation for Morocco’s proposed closer links with European Union and the dismantling of custom duties.

Further information about this country can be found on the Morocco pages.

Further information about this sector can be found on the Metals & Minerals Industry pages.

Characteristics of Market

I - THE STRUCTURE OF THE METALS MARKET IN MOROCCO
a) - Steel bar production

In the early seventies, Morocco announced an ambitious programme in order to develop its heavy industry with a view to joining the international steel producers club. They proposed to develop an integrated project involving coal production and with this in mind they undertook a feasibility study on iron ore extraction, processing and steel milling. This industrial complex was to be developed in a joint venture with the Algerian government. However, political problems between the two countries surfaced in early 1971 and this put the joint venture on hold. In 1974, therefore, Morocco decided to develop its own, rather less ambitious industrial complex. Iron ore was extracted from the ore mine at Seferif and coal was mined at the Jerrada coal mine. In 1984, steel bars for construction were produced from imported billets at Sonasid. The steel mill started producing an average of 240,000 tonnes of steel bars per year until the early nineties when the company’s production capacity rose to about 500,000 tonnes per annum. The technology used at Sonasid is entirely British. With the advent of recent privatization, Sonasid’s controlling interests were transferred to Societe Nationale d’Investissements, one of the largest private financial holdings in the country, which recently became part of the Omnium Nord Africaine “ONA” holding.

The country’s second steel bar production unit, Longometal Afrique was, until the privatization of Sonasid, part of a group of companies specialising in the import and distribution of construction products under the control of Societe Nationale d’Investissements. Longometal’s production capacity was (and still is) maintained at 80,000 tonnes per annum. The parent company, Societe nationale d’Investissements, is in the process of building a steel mill at Jorf Lasfar (120-km south West of Casablanca). The feasibility study for this steel mill was carried out by the British Consultants Bureau company W.S.Atkins and the equipment was provided by the Italian company DANIELI. It will have a production capacity of 300,000 tonnes of steel construction bars by the use of imported billets as a first stage. The project is estimated to cost US$ 70 million.

Societe Nationale d’Investissements “SNI” initiated talks with 2 major European constructors with a view to installing a blast furnace at Sonasid’s steel factory in Nador. However, because of insufficient power capacity in the north, the construction of the smelter has been delayed until the Tahaddart power station is put into service, which is expected to be in 2004.

Sonasid’s production is limited to steel bars for construction. Diameters vary from 5.5 mm to 25 mm in 2 categories: AFNOR FeE 215 and AFNOR FeE 400. The company also produces a large selection of machine wires

- b) – The major Steel Pipe producing companies controlling the market are:

Batifer

Industube

Le Profile

Tube et Profil

Maghreb Tube

Fenie Brossette

Maghreb Tube located in Casablanca has an installed production capacity of 150,000 tonnes per year of pipes.

Fenie Brossette, Batifer as well as Industube (the latter is based in Tangier and works under the French Vallourec licence) have an average production capacity of between 10, 000 and 20,000 tonnes of pipes per annum.

Steel pipe production is considered to be the second most important branch of the steel industry in Morocco. Other products, such as corrugated sheets, are considered to be a complementary industry to that of pipe manufacturing. Batifer claims to be the largest corrugated sheet manufacturer in Morocco.

Reinforced bars (over 25-mm diameter), channels, angles, beams, rails as well as heavy plates are imported.

C – Tin can production

2 Two large companies control the market of tin cans for food & industrial use. 1) – Carnaud Maroc

Created in 1930, this company controls about 60% of the local market with 3 production units, including 2 located in Casablanca (Ain-Sebaa and Roches-Noires) and a third one in Agadir. Recently, Carnaud Maroc, in association with Crown Carnaud Metal Box (UK), invested in a new factory to produce easy open-end tin cans, (as well as plastic containers for food). 2 ) – Gourvenec

Created in 1936, Gourvenec is the second most important tin can manufacturer. The company’s share of the market is estimated to be about 30%.

3 ) – Sardisud

Located in the south of Morocco, Sardisud was created in 1988 with the aim of processing fishing products for the North American market. In order to comply with the FDA regulations relating to processing and canning, Sardisud installed its own tin can manufacturing unit within its facilities. However, they manufacture solely for their own use.

Several sardine processing units are also now equipped with tin can manufacturing facilities specifically for their own use.

Morocco imports over 236 different types of steel products. The annual expenditure on these products was estimated, in 2000 (latest statistics available) at £290 million which represents 4.5% of the country’s total imports. The range of steel products imported are listed under the following Moroccan nomenclature numbers:
Nomenclature numbers: 72.12 to 72.29 and 73.02 to 73.07

d) – Other metals

1 ) - Copper: although Morocco produces the raw product and processes it at Guemassa’s processing units, copper is not widely used. Most copper used in the country is imported within finished goods. The only existing industry in Morocco is, “MAC Z”, an SMI recently created by a young entrepreneur, which manufactures a limited quantity of copper pipes used in household heating systems.

2) – Aluminium : “Aluminium du Maroc” based in Tangier (the north of Morocco) is the only industry manufacturing aluminium bars based on the French Vallourec process. The company is well established and has been in business for several years. Recently introduced onto the country’s stock exchange, “Aluminium du Maroc” is in the process of modernizing the company’s production methods. The quality is not regarded as up to international standards. However, their entire production is sold domestically. Large quantities of aluminium bars, used in the manufacture of doors and windows, are still imported. Italy remains by far the main source of supply of this type of product.

3) – Bronze : 3 bronze casting companies recycle bronze from scrap ingots produced by over 18 (artisanal) bronze casting units. The most important one is Fonderie Alu Coquille, which specializes in custom made products such as ship propellers.

4) – Lead & tin: Morocco produces a limited quantity of lead and tin, which are processed in 2 different sites.

A)- Guemassa, which is one of the most modern mining processing units, is supplied with raw products from mines located in the south of the country, including Societe Miniere d’Imiter “SMI”. Both companies are under the control of ONA Pole Mine.

B) – Zellidja : this company, located in the north east of Morocco in the Rif mountains, processes its own raw product and has recently signed a contract to process about 800,000 tonnes of raw product on behalf of the Spanish Astury mine.

II - Trends in the market

Until recently, imports of metals were subject to a license issued by the Ministry of Commerce and Industry. The request for imports had to be approved by Sonasid, the state steel mill who took the final decision. The latter, who held a monopoly, approved only the imports of those products which were urgently required. The supply to the market was irregular and prices were so high that only a limited number of consumers (other than those involved in government projects) could afford to buy or use steel products. The import procedure has now been eased somewhat and customs duties on metals have been reduced (see above) thus encouraging direct imports. Artisans have developed new products based on various metals and the government recognizes, in the liberalization of this sector, an important job creation situation which previous decision-makers tended to ignore. The building, vehicle (mainly body works), artisan and oil industries have all contributed tremendously to the development of the steel/metals market in Morocco. The numbers of steel workshops, as well as importers, are growing. The quantities imported have also tripled during the last 5 years. Government initiatives, related to employment and both local and foreign competition, have encouraged investment in machinery and training. Demand is growing and prices for steel products are now accessible to the average consumer.

The market is now regularly well supplied and distribution is well organized, although Casablanca remains the most important “unloading” centre.

For around 10 years or more, the main competition was located around the Mediterranean basin, particularly Spain, Italy and France. However, nowadays, new importers tend to source their products from countries such Belarussia, the Ukraine, China and Kazakhstan. With the introduction of products from these countries, the market for steel products has become very “price sensitive”.

Nomenclature numbers:

72.12 to 29
73.02 to 07

Customs duties applied: The basic rates applied to chapter 72 vary from 2.5 % to 25 % with the majority of the articles being taxed at 2.5 %, whilst chapter 73 vary from 2.5 % to 32 %. Import tax (PFI of 15 %) and VAT (20%) need to be added.

Source: Trade Partners UK

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