Project Description

Provision of up to MAD 150m (ca. EUR 13.6m equivalent) senior loan in favour of PROCANEQ to finance the purchase of new equipment for the extraction and transport of phosphate ore into the processing facilities in 3 phosphate mines, owned and operated by Office Cherifien des Phosphates ("OCP"), one of the world's largest producers of phosphate. The new equipment to be financed by the Bank will be more energy efficient using less diesel, therefore achieving lower GHG emissions.

Project Objectives

The project will support the Company's strategic plan, which aims to i) replace the existing equipment with more energy efficient one that is utilizing less diesel hence decreasing GHG emissions; ii) conduct exploration activities on three additional mines for OCP; iii) create more jobs in the sector by doubling its work force to more than 440 people; and iv) increase reporting quality and disclosures by adopting IFRS using the Bank's technical assistance.

Transition Impact

ETI score: 60Transition impact is expected to derive from: The expected transition impact of the project stems from (i) the "Competitive" quality as the client opted for new equipment instead of recycled one for more efficiency which will allow significant savings on operating expenses estimated at nearly EUR 10m and (ii) the "Inclusive" quality as the project introduces more open, equal and diverse HR policies and practices, broadening demand for human capital and delivers inclusive business policies, practices or standards at the client level.

Client Information

PROCANEQ MOROCCOPROCANEQ Maroc is a subsidiary of PROCAN Group, a company serving the mining industry. Established in 2016 and based in Morocco, PROCANEQ has been providing mining subcontracting services for OCP SA (a world leader in the mining industry with 40 Mt of phosphate rock produced) since 2018.

EBRD Finance Summary

EUR 13,765,139.01An up to MAD 150m (ca. EUR 13.6m equivalent) senior loan in favour of PROCANEQ.

Total Project Cost

EUR 31,069,985.69The total project cost is ca. EUR 30.4m to be financed along with BMCI (BNP Paribas Moroccan subsidiary) which are participating through a parallel loan for an equal amount up to ca. EUR 13.6m (MAD 150.0m). The remainder of ca. EUR 3.2m will be covered by the Company's own funds.

Additionality

PROCANEQ shall make use of EBRD expertise on higher financial standards. The Bank's financing also includes a dedicated TC for adopting IFRS reporting standards.

Environmental and Social Summary

Category B (2019) and considered high-medium risk. The project involves providing mining services (excavating and hauling waste rock and phosphate onsite to the crushing operations) and equipment to the owner/licence holder for several large currently operating (ie, brownfield) phosphate mines. The area around the mines has a long history of mining and mine rehabilitation in these areas is not completed to international standards. There are no complex operations performed on these sites, only the physical extraction, crushing, beneficiation and transportation of phosphate rock to offsite locations for further processing or shipping. This project appraisal was completed using internal resources and facilitated thorough review of a completed questionnaire, and of several standards policies and procedures of our client (Procaneq) and that of the site licence holder/operator, OCP. Main risks identified for this project include safety provisions for project workers, mine rehabilitation and air emissions. Our client is contracted to preform the mining and hauling operations under the environmental and social standards of OCP Group. OCP is a world leader in the fertiliser industry and an active member of the Extractives Industry Transparency Initiative. OCP publishes comprehensive sustainability reports highlighting their comprehensive environmental and social commitments which include (but are not limited to) a 13 billion USD green investment program which includes provision of renewable energy projects for all facilities by 2028, commitments to ISO certifications for all sites, compliance with IFC PS 5 for all land acquisition activities and cooperation on global initiatives on items including nature protection and water use (goal for 100 % use of non-conventional water by 2028). Two mines included in this project (Khouribga and Benguerir) are covered by an IFC loan for installation of a total of 202 MW solar plants to provide renewable energy for the operations, thereby addressing one of the most significant environmental risks from these sites as the alternative is to rely on higher carbon alternatives. Procaneq are required to comply with OCP standards for all onsite activities, and OCP regularly audit compliance with such. Any identified non conformances must be addressed by Procaneq in accordance with their contract with OCP. One instance illustrating how this system works is that a recent audit of OCP highlighted the potential for pollution resulting from a vehicle washing area. Based on this audit finding from OCP, Procaneq has initiated an investigation into possible pollution, and the results of this will be provided to OCP and EBRD. Observations from the EBRD mining engineer onsite confirm general good performance onsite, with notes of adequate hazard signage and secondary containment at areas of fuel and lubrication storage. Procaneq maintains safety records for the facilities, and based on these records the operations compare favourably to industry statistics (from ICMM, 2022) including the Total Recordable Injury/ Casualty Frequency Rate. The ICMM rate is 2.66 vs site values for the past two years of 1.16 to 0.8, with no fatalities on site over this time period. Procaneq also maintain ISO 26000 certification which according to the audit completed in 2023 is considered mature and robust. There are required actions from this audit and Procaneq has developed plans to address these points. Procaneq have environmental and social policies in place, including those to apply core ILO requirements for all projects and risk assessment procedures for routine and non routine tasks. An ESAP has been prepared for this project (currently under review by the client) and calls for development and implementation of an internal and external grievance mechanism, implementation of environmental awareness training for all employees, development of mine rehabilitation/closure strategy, augmenting the existing GHG assessment to cover scope 2 and 3 emissions and to facilitate periodical audits by ESD. Our influence on mine rehabilitation is likely to be limited to the mining areas associated with the project.

Technical Cooperation and Grant Financing

The Project includes a number of TCs, the key being: 1) Gender & Economic Inclusion TC aimded at improving access to economic opportunities for women in mining sector in Morocco; and 2) a TC foradopting IFRS reporting standards.

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.