Southerly expansion creates new cement capacity in Morocco

This week, LafargeHolcim reported cement volumes rising by more than two per cent in Morocco with construction of the company's 3500tpd Souss plant now advancing well and on course for commissioning by thyssenKrupp Industrial Solutions in the 3Q20. The greenfield project will see 1.2Mta added to the group's Moroccan production capacity, which currently stands at approximately 12.5Mta.

This north African market is already due to see significant change with the recent acquisition by Ciments du Maroc (HeidelbergCement) of Atlantic Cement and the Cimsud plant. The Cimsud plant is a 0.5Mta grinding facility, near Laayoune, in the south of the country and is still under construction. Atlantic Cement is currently building an integrated 2.2Mta cement plant at Settat province, in the northeast. HeidelbergCement's own operations include the Safi plant, which has an agreement with Omega Green to use CO₂ emitted by the cement works in the production of algae, which are expected to absorb 80-100tpa of CO₂.

Earlier this year, it was also reported that FLSmidth would be supplying the greenfield plant of Société Générale des Travaux du Maroc with a 3600tpd integrated plant at Ouled Ghanem, northwest of Marrakesh. This 1.5Mta plant is expected to start up in the 3Q22.

Other existing players in Morocco currently include Addoha Group-owned Ciments de l’Atlas with its 3.2Mta cement capacity and Votorantim Cimentos, which operates 1.9Mta of cement capacity in the country. Ciments de l’Atlas has announced that it intends to add a greenfield 1.2Mta cement plant in Nador. A new entrant into the market will be Cemos Ciment SA (part of Cemos Group Plc and Global Oil Shale OY), which plans a 1.6Mta integrated production facility in Tarfaya, southwestern Morocco.

Cement demand
Cement demand in the country has been rather unpredictable in the last 12 months with rises of 15 per cent in March 2018, but a contraction of six per cent over the first four months of 2018. In June 2018 growth resumed as consumption advanced 13 per cent YoY. However, the market contracted significantly in August with volumes falling by 28 per cent. This year demand has been rising more consistently with a four per cent YoY gain in February 2019 and advances of 14 per cent in March and four per cent in June.

However, disappointing news for the construction sector came in August when the government announced that the completion date for the port of Safi would be postponed. The port has run into a series of problems during construction, including the cracking of 700 blocks of concrete in 2017 that prevented coal deliveries from being unloaded. The construction site is also the location for a 1.386MW coal-fired power plant, the largest power plant in the country, which will be using ultra-supercritical technology. Ciments du Maroc is supplying 220,000t of marine and high-quality cement for the power plant.

Outlook
While Morocco forges its construction to its most southerly points in its eagerness to develop, it is the cities of Casablanca and Marrakesh that are the key centres of cement demand. For this reason, analysts suggest that Ciments du Maroc is expected to outperform LafargeHolcim in the Casablanca stock market, mainly because of its locations. However, LafargeHolcim has a huge lead in market share and this should give its new Souss plant time to establish itself near the southern region of Ait Melloul and Agadir.