The Kingdom of Morocco is a Constitutional Monarchy located in the extreme north west of Africa and to the south of the Iberian Peninsula across the Strait of Gibraltar. Next to the vital trade routes that pass through the Strait from the Mediterranean and further afield, Morocco has developed a mixed economy based on exports to its EU neighbours. Its location, along with a relatively stable political situation, has ensured steady economic growth. The country ranks in the top quarter of African nations in terms of GDP/capita.
Like many countries in Africa, Morocco has had a variety of rulers and forms of government over the years. Following the Arab conquest of north Africa in around 700AD, a series of Moroccan Muslim dynasties ruled over the country, most notably the Sa'adi monarchy.
However, in the 1860s, Spain occupied the northern part of Morocco before the French imposed a protectorate over the country in 1912. Following a struggle against France, Morocco became independent in 1956.
The 'Arab Spring' political unrest of 2011 that was seen across north Africa was partially placated in Morocco after the King proposed a referendum on a new constitution that satisfied some of the demands of the protesters. The referendum approved the new constitution by a land-slide, but some disquiet remains. There have been renewed demands from some sections of the political spectrum and accusations that the political system remains open to corruption.
Economy
Morocco's proximity to Europe and relatively low labour costs have given rise to a rapidly-growing market economy in recent years, as highlighted by Figure 1. Spain, the closest EU member to Morocco and its former colonial ruler, remains the country's largest trading partner.
Following market reforms, the reign of King Mohammed VI, which began in 1999, has seen steady growth, low inflation and reduced unemployment.
However, in 2011 and 2012 the rising cost of fuels, which are entirely imported and are also subsidised, put a high burden on government budgets and led to a review of the subsidy policy at the end of 2013.
Major economic challenges for Morocco are closely related to its social challenges. They include improving the education system, reducing corruption and taking further action to reduce its unwieldy subsidy allowances.
Cement industry - Introduction
Morocco has a relatively well-developed cement industry that has benefitted from significant new capacity since the turn of the 21st Century. It has 13 integrated cement plants, one grinding plant and additional grinding capacity at one integrated plant. There is also a small grinding plant in Western Sahara, bringing the total capacity to 24.1Mt/yr.
The cement industry is dominated by the multinational cement producers Lafarge, Holcim, Italcementi and Votorantim, which operate 11 of the 13 integrated plants. This corresponds to 19Mt/yr of the country's 22.2Mt/yr capacity, or 86% of capacity. Foreign producers operate all of the grinding facilities in Morocco and Western Sahara. The only Moroccan-owned cement producer is Ciments de l'Atlas (CIMAT), which operates two integrated facilities.
Cement Industry - Production
Figure 1 shows Moroccan GDP/capita for the 21st Century, along with cement production according to the United States Geological Survey (USGS). As in many nations there is a strong correlation between these factors (R2 = 0.8), although Morocco has historically used relatively little cement compared to some of its neighbours like Algeria or Tunisia.
GDP/capita and cement production have both risen steadily over the course of the 2000s and 2010s. The USGS data shows that cement production has risen from around 8Mt/yr in 2000 to just under 15Mt/yr in 2012, a rise of 79%. Much of the growth in cement production took place between 2000 and 2008, although this has since plateaued, with a slight dip in 2010.
The most recent year for which the USGS reports data for Morocco is 2012, when cement production was 14.5Mt, a 3.6% rise over 2011. The USGS data also shows a dip in cement production in 2004. The reason for this is unclear, but may be related to events at a single producer
or plant.
Cement Industry - Consumption
L'Association Professionnelle des Cimentiers du Maroc (APC) provides detailed statistics for cement sales in Morocco, which can be taken as a proxy for cement consumption. They are generally higher than the production values from the USGS, which is most likely related to Morocco importing some cement. Exports from southern Europe to north Africa have become a common theme in the Mediterranean region since the onset of the global economic crisis, which badly affected Spain, Portugal, Italy and Greece.
Annual totals for January 2009 to September 2014 are shown in Table 1. The data shows an increase in domestic cement sales from 2009 to 2011 followed by a decline from 2011 to 2013.
At first glance this appears inconsistent with the strong correlation between cement production and GDP/capita that is shown in Figure 1. However, other factors to consider include a drop off in exports to southern European countries, which will have affected government revenues, and the reduction in government subsidies, which will have affected both businesses and private individuals. This has increased the price of fuel (among other things), diverting potential spending away from a range of other areas, including construction. There have also been a large number of recent infrastructure projects, notably new railways and Autoroutes, which may have led to a temporary rise in cement demand in the late 2000s and early 2010s. This may now be showing up as apparent year-on-year decreases in demand.
So far in 2014 the trend is once again towards a year-on-year decrease in sales. In the first nine months of the year, cement sales were 10.7Mt, 5.3% lower than the 11.3Mt sold in the same period of 2013 (See Table 1).
Year | Sales (Mt) | Y-o-Y (%) |
2009 | 14.5 | - |
2010 | 14.6 | +0.7 |
2011 | 16.0 | +9.6 |
2012 | 15.8 | -1.25 |
2013 | 14.9 | -5.7 |
2014* | 10.7 | -5.3 |
Table 1: Cement sales in Morocco and Western Sahara for 2009 -2014, with year-on-year percentage changes.
*The sales shown for 2014 are for the first eight months only. The percentage changes shown for 2014 are for the first eight months, relative to first eight months of 2013. Source: L'Association Professionnelle des Cimentiers du Maroc.
Cement industry - Seasonality
Figure 2 shows monthly Moroccan cement sales for January 2009 to September 2014. These show the seasonality of the industry, which has peaked in the Northern Hemisphere spring and autumn in recent years.
There are two consistent minimum periods of cement production. The first is February, during which cement production is consistently lower than in January and March. This may be related to timings of plant shutdowns. The second period of minimum cement production is Ramadan, which moves backwards relative to the Gregorian calendar. In 2009 and 2010 the month most affected by Ramadan was September. In 2011, 2012 and 2013 it was August and in 2014 it was July.
The 'Ramadan dip' in 2014 was more pronounced than in previous years and may account for the apparent 'poor' performance of 2014 compared to 2013. Indeed, July 2014 was a particularly weak month (0.79Mt) compared to July 2013 (1.17Mt). However, the combined sales of July and August 2014 were 2.03Mt, almost exactly the same as the 2.06Mt sold in the same two months of 2013.
The movement of Ramadan leads to a confusing picture in the autumn, when there is a sudden recovery in cement sales for one or two months. The pattern after this is less clear. Cement sales have spiked in various months, apparently simply following demand. Weather conditions at this time of the year are generally benign and are not likely to be a significant factor in sales.
Cement Industry - By region
The APC monthly sales data is split into 16 regions across Morocco and Western Sahara. The cement sales are closely matched to population distribution.
In the first eight months of 2014, the region that consumed the most was Grand Casablanca, the most populous region, which consumed 1.2Mt of cement (See Table 2). A close second and third were the northern region that encompasses Tangier and Tétouan (1.09Mt) and Marrakech-Tensift-Haouz (0.96Mt). The least populated regions, covering the south of Morocco, as well as all of Western Sahara, have very low cement sales, with the southern-most region consuming just 19,277t in the first eight months of 2014.
Table 3 shows the changes in annual sales that have contributed to Morocco's declining sales in recent years. Just two regions, Laâyoun-Boujdour-S. Elhamra and Doukkala-Abda, saw cement sales rise between 2011-12 and 2012-13. Nine regions saw one year of growth and one of decline and another five regions saw declines in both 2012 and 2013. Between 2012 and 2013 only three out of the 16 regions had rising cement sales, with the largest falls in Oued Ed-Dahab-Lagouira, Guelmim-Es-Smara and Tadla-Azilal.
Region | January | February | March | April | May | June | July | August | January - August | |
1 | Oued Ed-Dahab-Lagouira | 2599 | 2616 | 2796 | 2567 | 2695 | 2231 | 1807 | 1966 | 19,277 |
2 | Laâyoun-Boujdour-S. Elhamra | 26,020 | 26,143 | 30,442 | 30,219 | 31,051 | 28,983 | 18,936 | 25,886 | 217,680 |
3 | Guelmim-Es-Smara | 25,645 | 16,967 | 17,816 | 17,363 | 19,563 | 16,302 | 18,613 | 15,720 | 147,989 |
4 | Souss-Massa-Draa | 84,998 | 109,927 | 122,654 | 127,341 | 140,556 | 110,939 | 65,588 | 99,483 | 861,486 |
5 | Gharb-Cherarda-B.Hssen | 49,716 | 47,459 | 55,220 | 60,061 | 64,641 | 61,499 | 45,408 | 65,096 | 449,100 |
6 | Chaouia-Ourdigha | 52,897 | 56,552 | 70,486 | 72,799 | 73,167 | 67,614 | 40,109 | 57,700 | 491,324 |
7 | Marrakech-Tensift-Haouz | 102,418 | 116,862 | 140,478 | 135,407 | 130,904 | 125,245 | 85,261 | 119,995 | 956,570 |
8 | Oriental | 117,602 | 112,603 | 125,829 | 137,176 | 125,420 | 118,531 | 53,001 | 99,645 | 889,807 |
9 | Grand Casablanca | 119,506 | 164,070 | 182,708 | 186,639 | 182,547 | 169,592 | 109,900 | 128,603 | 1,243,565 |
10 | Rabat-Salé-Zemmour-Zaer | 73,441 | 87,100 | 107,592 | 107,620 | 108,568 | 99,213 | 71,018 | 83,629 | 738,181 |
11 | Doukkala-Abda | 67,249 | 75,344 | 82,619 | 80,233 | 84,093 | 79,298 | 67,332 | 92,076 | 628,244 |
12 | Tadla-Azilal | 46,354 | 59,259 | 66,197 | 59,778 | 51,137 | 50,174 | 31,844 | 60,979 | 425,722 |
13 | Meknès-Tafilalt | 50,417 | 54,226 | 70,415 | 67,861 | 70,418 | 66,500 | 38,968 | 63,375 | 482,180 |
14 | Fès - Bouleman | 49,183 | 51,849 | 62,917 | 59,269 | 60,882 | 56,965 | 31,471 | 47,136 | 419,672 |
15 | Taza-Al Houceima-Taounate | 36,513 | 34,711 | 43,726 | 46,473 | 43,965 | 38,342 | 17,938 | 36,243 | 297,911 |
16 | Tanger-Tétouan | 122,137 | 126,364 | 151,597 | 147,670 | 162,138 | 151,298 | 100,908 | 127,889 | 1,090,001 |
Total | 1,026,694 | 1,142,053 | 1,333,492 | 1,338,476 | 1,351,745 | 1,242,726 | 788,102 | 1,125,421 | 9,358,709 |
Table 2: Cement sales in each of Morocco's 16 regions so far in 2014. Figures in tonnes. Source: L'Association Professionnelle des Cimentiers du Maroc.
Region | Sales in 2011 (t) | Sales in 2012 (t) | Sales in 2013 (t) | % Change (2011-2012) | % Change (2012-2013) |
1 | 61,568 | 44,256 | 33,106 | -28.1 | -25.2 |
2 | 227,126 | 308,761 | 325,943 | +35.9 | +5.6 |
3 | 282,263 | 273,382 | 157,194 | -3.1 | -42.5 |
4 | 1,558,835 | 1,399,880 | 1,350,188 | -10.2 | -3.5 |
5 | 764,019 | 769,057 | 767,428 | +0.7 | -0.2 |
6 | 743,274 | 836,544 | 799,015 | +12.5 | -4.5 |
7 | 1,595,811 | 1,701,529 | 1,584,004 | +6.6 | -6.9 |
8 | 1,367,282 | 1,404,940 | 1,362,081 | +2.8 | -3.1 |
9 | 2,458,596 | 2,161,001 | 1,968,913 | -12.1 | -8.9 |
10 | 1,219,948 | 1,237,947 | 1,135,229 | +1.5 | -8.3 |
11 | 915,937 | 978,832 | 1,072,220 | +6.9 | +9.5 |
12 | 782,704 | 803,575 | 647,886 | +2.7 | -19.4 |
13 | 906,110 | 811,043 | 766,943 | -10.5 | -5.4 |
14 | 808,818 | 834,535 | 736,667 | +3.2 | -11.7 |
15 | 645,220 | 502,081 | 512,914 | -22.2 | +2.2 |
16 | 1,792,111 | 1,803,693 | 1,644,608 | +0.6 | -8.8 |
Table 3: Annual cement sales in the 16 regions of Morocco and Western Sahara, 2011 - 2013. Figures in tonnes. Percentage changes between 2011/2012 and 2012/2013 are shown for each region. Source: L'Association Professionnelle des Cimentiers du Maroc.
Cement industry - By producer
Morocco's 13 integrated and three cement grinding plants are listed in Table 4 and shown on Figure 4. They are clustered in the north of the country, in many of the regions that have the highest cement sales. All but two plants are owned and operated by companies based outside Morocco. The exception is Ciments de L'Atlas (CIMAT).
No | Company | Location | Plant type | Capacity (Mt/yr) |
1 | Lafarge Maroc | Tangier | Integrated | 1.0 |
2 | Lafarge Maroc | Bouskoura | Integrated | 3.0 |
3 | Lafarge Maroc | Meknès | Integrated | 1.75 |
4 | Lafarge Maroc | Tétouan | Integrated | 2.5 |
5 | Holcim Maroc | Fes | Integrated | 1.9 |
6 | Holcim Maroc | Oujda | Integrated | 1.3 |
7 | Holcim Maroc | Settat | Integrated | 1.7 |
8 | Ciments du Maroc (Italcementi) | Marrakech | Integrated | 1.4 |
9 | Ciments du Maroc (Italcementi) | Agadir | Integrated | 2.2 |
10 | Ciments du Maroc (Italcementi) | Safi | Integrated | 1.0 |
11 | Ciments de l’Atlas (CIMAT) | Settat | Integrated | 1.6 |
12 | Ciments de l’Atlas (CIMAT) | Beni Mellal | Integrated | 1.6 |
13 | Asment de Témara (Votorantim) | Témara | Integrated | 1.25 |
Integrated cement capacity | 22.2 | |||
14 | Lafarge Maroc | Tanger | Addn. Grinding (See 1) | 1.0 |
15 | Holcim Maroc | Nador | Grinding | 0.4 |
16 | Ciments du Maroc (Italcementi) | Laâyoune, W Sahara | Grinding | 0.5 |
Grinding cement capacity | 1.9 | |||
TOTAL (Morocco & Western Sahara) | 24.1 |
Table 4: Integrated and grinding cement plants in Morocco and Western Sahara. Source: Research conducted towards publication of Global Cement Directory 2015.
Lafarge Maroc: Lafarge Maroc is 50%-owned by the multinational player Lafarge SA. It is Morocco's largest cement producer with four integrated plants. These include the nation's largest plant, the 3Mt/yr facility at Bouskoura. Lafarge Maroc's total capacity is 9.25Mt/yr, 1.0Mt/yr of which is grinding capacity.
Lafarge Maroc has mainly grown via acquisitions over the years. It has acquired its 1.75Mt/yr Meknès plant, which was originally built in 1945, its 1Mt/yr plant at Tangier (1954) and a modern 2.5Mt/yr plant at Tétouan, which came online in 2000.
The plant at Tangier can grind significantly more clinker than it can produce and so is listed as a separate grinding plant in Table 4 in addition to its entry in the integrated section. Bouskoura was briefly Morocco's only white cement plant, but it has ceased white cement production in the past few years.
Holcim Maroc: Switzerland's Holcim operates three cement plants in Morocco via Holcim Maroc, in which it has a 61% stake. Its plants are at Fes (1.9Mt/yr), Settat (1.8Mt/yr) and Oujda (1.3Mt/yr), which give it a total capacity of 4.9Mt/yr. The Settat plant was expanded from 0.9Mt/yr in 2012.
Holcim also operates a grinding, bagging and distribution centre at Nador (0.4Mt/yr) and a bagging and distribution centre in Casablanca, which takes its overall cement capacity to 5.3Mt/yr.
Ciments du Maroc: Italy's Italcementi Group operates in Morocco through Ciments du Maroc. It has three cement plants, which are located at Agadir (2.2Mt/yr), Safi (1.0Mt/yr) and Marrakech (1.4Mt/yr), as well as a grinding centre in Laâyoune (0.5Mt/yr). Its total integrated capacity is 4.6Mt/yr.
The bulk of Italcementi's assets come from its 1999 purchase of the Moroccan group Asmar, although it opened the Agadir plant, which was built by Denmark's FLSmidth, in 2010.
Ciments de L'Atlas (CIMAT): CIMAT is the only Moroccan-owned cement producer. It was launched by businessman Anas Sefrioui in 2007, who
commissioned Germany's Polysius to simultaneously construct two identical cement plants. He located these in the nationally strategic regions of Ben Ahmed and Beni Mellal. Each plant has a cement capacity of 1.6Mt/yr.
CIMAT aims to become a major player in Morocco and has also expanded, as Ciments d'Afrique (CIMAF), to other countries in north and west Africa. It is now present in Côte d'Ivoire, Cameroon, Guinea and Burkina Faso, where it is in the process of constructing a 0.5Mt/yr cement plant. In July 2014 it also announced plans for a US$40m cement grinding facility in Chad.
Asment de Témara: The smallest player in the market is Asment de Témara (1.25Mt/yr), located in Témara (close to Rabat) and owned by Votorantim of Brazil. It was upgraded from its former 0.85Mt/yr capacity in 2005 after first being constructed in 1978. The company and plant were long-term assets of Portugal's Cimpor, prior to a complex asset swap between Camargo Côrrea, Votorantim and Cimpor in 2012.
Cement industry - Future
The IMF now forecasts that the Moroccan economy will grow by 3.5% in 2014 and by 4.7% in 2015. Earlier in 2014 these figures had been as high as 3.9% and 4.9% respectively, but ongoing political tensions in the Middle East caused the IMF to downgrade its expectations across the region on 8 October 2014.
As can be seen from the figures above, the downgrade for Morocco was fairly moderate, with growth figures that would be the envy of many EU members.
"The ongoing implementation of structural reforms is beginning to bear fruit," said an IMF statement with reference to Morocco. "Growth is expected to pick up in 2015 and private investment is expected to strengthen with increased confidence, rising tourism receipts and stronger export performance."
In most economies these sentiments would be a good indicator of increased cement consumption. However, Morocco's cement consumption has stalled so far in the 2010s, with moderate increases in 2010 and 2011 since offset by declining demand in 2012 and 2013. In 2014 the trend appears set for another year of contraction. The relationship between GDP and cement sales may be becoming less predictable.
Falling cement sales will be unsettling to Morocco's cement producers, especially considering the gradual removal of government fuel subsidies. The recent removal of these in Egypt has led to squeezed margins, costly investment in new fuel feeding systems and plant closures due to lack of fuel. If this happens in Morocco, its low capacity utilisation rate, 62% in 2013 (and almost certainly less in 2014), will only slide further, regardless of GDP trends.
It will be interesting to see what the rest of 2014 brings. It is possible, for instance, that the relatively early Ramadan will result in a surge in late autumn and a recovery in sales over the course of the 2014 as
a whole.
Cement industry - LafargeHolcim merger
As well as issues around fuel supply and falling cement sales, another large variable in the future of the Moroccan cement market will be the LafargeHolcim mega-merger. This is expected to be completed in mid-2015.
The four Lafarge Maroc plants are 50:50 joint ventures and the three Holcim plants are 61%-owned by Holcim. This means that, even though the new LafargeHolcim would 'have its name on' seven out of 13 integrated plants, its share of the Moroccan market after considering the other shareholders, would be 'just' 33%.
A list of Lafarge/Holcim divestments presented in July 2014 did not feature any Moroccan facilities and whether or not the country's competition authorities will force sales remains to be seen. We have seen much discussion surrounding potential buyers of LafargeHolcim divestments in other world regions. In the event that the merging parties are forced to sell in Morocco, potential buyers could include CIMAT and the Nigerian pan-African giant Dangote Cement.
However, one thing is certain: All cement producers operating in Morocco will hope that the IMF's growth forecasts can be translated into rising sales, turning the tide back in their favour.