July 4, 2016 / 10:07 PM / a year ago

UPDATE 1-Delphi, Linamar to build new plants in Morocco -minister

(Adds details and background)

CASABLANCA, July 4 (Reuters) - Canada's Linamar Corp will build a 2.7 billion dirhams ($280 million) plant in Morocco to make engine parts, Morocco's industry minister said on Monday.

Moulay Hafid Elalamy said U.S. auto parts maker Delphi will also launch a new factory making electrical distribution systems and a research and development center in the North African kingdom.

Morocco expects auto industry exports to reach an annual 100 billion dirhams ($10.2 billion) by 2020 as a result of PSA Peugeot Citroen starting production at its new 557 million euro ($630 million) factory.

Peugeot SA unveiled its plan last year to build the 200,000-vehicle capacity plant, following up rival Renault SA, which has two factories making fully assembled cars in the kingdom.

The Moroccan government aims to lift the overall industrial component of gross domestic product (GDP) to 20 percent, up from 16 percent, reaching around 500,000 jobs by the same period.

Unlike many countries in the region, Morocco managed to avoid a big drop in foreign direct investments in the wake of the global financial crisis and the Arab Spring uprisings of 2011, partly by marketing itself as an export base for Europe, the Middle East and Africa.

Linamar's plant will start by supplying engine parts to the new Peugeot factory before expanding to new plants that should open soon in Morocco.

"Delphi's investment is huge, some seven projects including a plant and a research and development center, but I can't disclose the investment amount," the Moroccan industry minister told reporters.

The minister was speaking at a press conference where he announced Morocco's new investment charter to boost the country's emerging industry.

Delphi was the first auto parts maker to open units in Morocco in 1999, and has three operating plants employing around 12,000 workers.

The Moroccan government sees the country's GDP growing by less than 2 percent in 2016, slower than an estimated 5 percent in 2015 as agricultural output fell from an exceptional 2015. However, non-agricultural activity will increase by 2.3 percent in 2016, after 2.5 percent growth in 2015.

Reporting By Aziz El Yaakoubi; Editing by Marguerita Choy

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