(Alliance News) - Emmerson PLC on Thursday said it will continue to seek environmental approval for the Khemisset project in Morocco, after it was referred from regional level to the national Commission Ministerielle de Pilotage.
Shares in Emmerson were down 35% to 2.34 pence each in London on Thursday morning.
The Morocco-focused potash development company said basic engineering studies were reaching completion with final reports and designs due shortly.
It also said project finance due diligence is to run in parallel with an updated bankable feasibility study following environmental approval.
Emmerson said the environmental and social impact assessment approval process "remains the key priority" for the company and "hinges on the impact of the project on water resources for the region, a sensitive issue in the context of climate change and recent droughts".
The company has invested considerable time and resources into developing robust solutions, Emmerson said.
It exercised its right to refer approval to the national ministerial committee, after regional investment authority Commission Regionale Unifiee d'Investissement was "unable to approve the application" following a recent evaluation meeting.
Emmerson added that work on the seven technical packages that make up the basic engineering workstream is now largely complete, with final drawings and reports only remaining, regarding power supply, highway junction, mine-site infrastructure and portal and decline designs.
Once completed, the potash firm said this information will be included in an updated BFS. The updated BFS will likely take six months to complete, Emmerson said, after environmental approval has been received.
The BFS will include a detailed financial model based on the latest design of the plant and mine workings, as well as reflecting cost inflation since the feasibility study completed in 2020.
"The company believes the measures taken to address all concerns raised, combined with the project's significant economic benefits and contribution towards addressing food security, are compelling and underline its strategic importance to the Kingdom of Morocco. On this basis, the company remains confident it will receive approval for its proposals," Emmerson said.
Chief Executive Officer Graham Clarke commented: "Morocco plays an important role in the global fertiliser market, building on the kingdom's large phosphate product exports. The fast-growing market in Africa, on top of established demand from Europe and Brazil, makes this an exciting moment for potash. Once the environmental plan approval process is completed, we look forward to moving towards the finance and construction of this nationally important project.
"Thankfully, we are now seeing softening of inflation in capital costs along with commodity and particularly energy prices. Energy forms the largest single part of the operating costs. The improvements we have identified during the basic engineering will also need to be quantified and used as updated inputs for the financial model. We believe cost inflation will apply to all potash projects, and we expect Khemisset to remain in a competitive position on the cost curve not least due to its favourable geology and location."
By Greg Rosenvinge, Alliance News reporter
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Emmerson (EML)