TIDMEML
RNS Number : 1373X
Emmerson PLC
26 August 2020
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
26 August 2020
Emmerson Plc
("Emmerson" or "the Company")
Results from the Khemisset Project Socio-economic Study
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce the results from the Socio-economic Study
for its Khemisset Potash Project in Morocco ('Khemisset' or 'the
Project') which provides measurable and verifiable confirmation of
the significant benefits that the Project will deliver at a local,
regional and national level.
The highlights of the study include:
-- A total of 2,385 direct and indirect jobs will be created
during the construction of the project. Once fully operational a
total of 1,500 jobs will be created with 760 being direct employees
and the Company is targeting to fill 90% of roles at the mine with
employees living within Khemisset and the surrounding communes
-- Total investment over the life of the Project is estimated to
be US$2.5bn and the Company will adopt a procurement strategy to
provide preferential treatment to local, regional and in country
providers to maximise the benefits to Morocco
-- The economic impact of the Project will increase the local GDP per capita by an estimated 40%
-- The additional tax contributions resulting from the Project
represent an estimated 176% of tax revenues generated locally, 5.1%
regionally and almost 1% nationally
-- The study was carried out by renowned Professor in Economics, Dr Sallem Koubida.
Emmerson CEO, Graham Clarke, commented, "We are delighted with
the outputs of the study which demonstrate that the local, regional
and national benefits that the Project will bring are significant.
Our company values are summarised by the phrase "doing the right
things in the right way" so it is an important part of the
Company's approach that the development of the Khemisset project
has a positive impact on the local area and has a national
significance which we have now demonstrated will be the case."
Summary of the Socio-economic Study
The socio-economic baseline settings were analysed and applied
to the calculated potential monetary and non-monetary impacts using
a multi-dimensional framework. This process has methodically proven
the potential for the Project to be a development catalyst for the
province of Khemisset in particular and Morocco in general.
The Study has proved that Khemisset combines the appropriate
attributes for sustainable development, namely its location,
outstanding economic metrics, corporate policies & standards,
and government support.
Background
The Khemisset Potash Project will have a significant positive
impact on the Moroccan economy. Total project investment is
projected to be US$2.5 billion over the life of mine. The Project
will produce over 700,000 tonnes of saleable K(60) MOP (Muriate of
Potash) and 1 million tonnes of de-icing salt per year. The
projected mine life is 19 years although there is potential to
extend this timeframe based on the mineral resources already in
place.
Employment Benefits
Construction of the mine and associated infrastructure is
expected to generate a total of more than 2,385 direct and indirect
jobs. When operational, the mine will directly employ over 760
people whilst a total of 1,500 roles will be created by the effect
of the employment multiplier. The Company has a policy to source,
where skills are available, ninety per cent (90%) of all employees
from the local area including the city of Khemisset and its
surrounding communes.
Procurement Strategy
Capital costs to build the mine are estimated at US$411 million.
Construction is expected to take 24 months. Operating costs are
estimated to be over US$100 million per annum and the Company will
adopt a procurement strategy that seeks to provide preferential
treatment to locally based providers of equipment and labour.
Maximising the value of Capex and Opex procured from within Morocco
will further increase the benefits to the local, regional and
national economy.
Fiscal Contribution
Fiscal contributions from the Project include mineral extraction
tax, corporate income tax, payroll tax, and withholding tax on
dividends. The direct fiscal contribution of the Project is
estimated to be approximately US$63 million per annum. Indirect
fiscal contribution by effect of a multiplier is estimated at
around US$146 million per annum meaning a total potential
contribution of over US$200 million per annum. This fiscal
contribution represents an estimated 176% of taxes generated by the
local economy, 5.1% of regional taxes, and almost 1% of national
tax revenues. These numbers confirm the potential for the Project
to significantly contribute to Moroccan tax revenues, and thus to
socio-economic development in the country.
Export Revenues
Products generated by the Khemisset Potash Project will likely
be exported to markets in the USA, Europe and Brazil. Revenue from
the export of MOP and de-icing salt is estimated to contribute an
additional 8% to Morocco's mineral export revenue, 110% to
non-phosphates export revenue, and is expected to have a
significant positive effect on Morocco's current account deficit.
Capital investment financed from overseas and reinvested profit
will also contribute to foreign direct investment to Morocco.
Significant GDP Impacts
The Khemisset Potash Project will not only be the first potash
project in Morocco, but the first in Africa. The economic impacts
of the Project will be profound with significant benefits being
felt at the local, regional and national level:
-- Locally within the city of Khemisset and surrounding communes
the Project is estimated to increase GDP per capita by 40%
(approximately US$180 million per annum)
-- Regionally within Rabat-Sale-Kenitra the GDP per capita contribution is projected to be 1.24% (approximately US$234 million per annum)
-- Nationally, the GDP per capita contribution is forecast to be
0.42% (approximately US$500 million per annum).
Contribution to Sustainable Development
The Company's corporate policies and standards aim to deliver
sustainable benefits for the Project and its stakeholders. Analyses
of the potential impacts through a five-dimensional work frame has
confirmed the potential contribution of the Project to the
Sustainable Development Goals of the United Nations Development
Program in Morocco.
Study Author
The study was carried out by Dr Sallem Koubida, a Moroccan
Professor of Economics. Dr Koubida is a renowned economist and has
completed similar studies for several industrial development
projects including a multi-national company investing in fast
moving consumer goods in Morocco. Currently, he is Associate
Professor of Economics and the Chair of Quality Assurance and
Operating Effectiveness at the School of Business Administration,
Al Akhawayn University Ifrane, Morocco.
**ENDS**
For further information, please visit www.emmersonplc.com,
follow us on Twitter (@emmerson_plc), or contact:
Graham Clarke
Edward McDermott Emmerson plc +44 (0) 207 236 1177
Jerry Keen
Toby Gibbs
John More Shore Capital +44 (0)20 7408 4090
Damon Heath
Isabella Pierre Shard Capital +44 (0) 207 628 3396
St Brides Partners
Megan Denison Limited
Susie Geliher Financial PR/IR +44 (0)20 7236 1177
Notes to Editors
Emmerson's primary focus is on developing the Project located in
Northern Morocco. The Project has a large JORC Resource Estimate of
537Mt @ 9.24% K(2) O and significant exploration potential with an
accelerated development pathway targeting a low capex, high margin
mine. Khemisset is perfectly located to capitalise on the expected
growth of African fertiliser consumption whilst also being located
on the doorstep of European markets. This unique positioning means
the Project will receive a premium netback price compared to
existing potash producers. The need to feed the world's rapidly
increasing population is driving demand for potash and Emmerson is
well placed to benefit from the opportunities this presents. The
Feasibility Study released in June 2020 indicated Khemisset has the
potential to be among the lowest capital cost development stage
potash projects in the world and also, as a result of its location,
one of the highest margin projects. This delivered outstanding
economics including a post-tax NPV(8) of approximately US$1.4
billion using industry expert, Argus', price forecasts.
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