Food security is an increasingly pressing global concern, with population growth increasing dependence on intensive farming methods.

Despite not being a major food producing region, the Middle East and North Africa (Mena) region is playing a major role by supplying phosphate rock and fertilisers for use in the agriculture and food production sectors.

Morocco’s role

With 75 per cent of the world’s phosphates deposits, Morocco is set to play a vital role in global food security. Historically, the North African state has exported the majority of the phosphate rock it produces to be converted into downstream products such as phosphoric acid and fertilisers by companies close to large agricultural markets.

Now, however, Rabat is driving a series of major strategic investments aiming to kick-start the country’s downstream sector, reinforcing Morocco’s position alongside other producers such as Saudi Arabia and Jordan as the Mena region’s global players in the phosphate industry.

World phosphate mine production and reserves, 2013
  (Million tonnes)
China 97,000
US 32,300
Morocco and Western Sahara 28,000
Russia 12,500
Jordan 7,000
Brazil 6,740
Egypt 6,000
Tunisia 4,000
Peru 3,900
Israel 3,600
Saudi Arabia 3,000
Australia 2,600
South Africa 2,300
Mexico 1,700
Kazakhstan 1,600
Algeria 1,500
India 1,270
Senegal 920
Togo 900
Syria 500
Iraq 350
Canada 300
Other countries 5,630
World total 224,000
Source: US Geological Survey

The state-owned OCP Group is charged with running Morocco’s phosphates sector. It was established as a company to export phosphate rock in 1920. Today, OCP is ushering in a new era where it will slowly transition from a company that primarily sells phosphate rock and phosphoric acid to a fully integrated company that also produces large volumes of phosphoric acid and fertilisers.

The company is responsible for the full development of Morocco’s estimated 50 billion tonnes of phosphate reserves, including mining, production and all downstream activities.  

OCP exports

In 2013, OCP produced more than 26 million tonnes of phosphate rock, of which 8.6 million tonnes were exported. Its downstream activities included the production of 4.4 million tonnes of phosphoric acid and 4.8 million tonnes of fertilisers, of which 2.3 million tonnes and 4.3 million tonnes were exported respectively.

World phosphate mine production and reserves
  Reserves
(million tonnes)
Morocco and Western Sahara 50,000,000
China 3,700,000
Algeria 2,200,000
Syria 1,800,000
South Africa 1,500,000
Jordan 1,300,000
Russia 1,300,000
US 1,100,000
Australia 870,000
Peru 820,000
Iraq 430,000
Brazil 270,000
Kazakhstan 260,000
Saudi Arabia 211,000
Israel 130,000
Egypt 100,000
Tunisia 100,000
Senegal 50,000
India 35,000
Mexico 30,000
Togo 30,000
Canada 2,000
Other countries 520,000
World total 67,000,000
Source: US Geological Survey 

OCP is the world’s number one exporter of phosphate in all of its forms, making up about 28 per cent of the global market, and the firm employs more than 23,000 people. The company is in the middle of a $17.4bn investment programme that will encompass the full portfolio of its operations. 

“[OCP] is starting to focus on downstream now more than traditional markets and this is only going to increase in the future,” says Alberto Persona, phosphates and potash consultant for UK commodities analyst CRU Group.

“The big game changer is set to be the new slurry pipeline OCP is developing and when that comes online it will have a massive impact on the company’s operating costs.”

New pipeline

When fully operational, the pipeline will be the largest of its type in the world and has been an extremely challenging project from an engineering standpoint. It will transport phosphates in slurry form for 240 kilometres from mines in Korigba to the industrial port of Jorf Lasfar for use in both export and downstream conversion. 

Global phosphate rock production capacity  (Million tonnes)
2013 2017
228 260
Source: US Geological Survey

The initial annual throughput it expected to be 30 million tonnes, which will eventually rise to 38 million tonnes when required.

OCP currently transports the phosphate in dry form by rail and road, but the pipeline will completely replace this. The downstream plants that use dry phosphate as a feedstock will also need to be replaced by ones that can handle the resource in wet form.

“Changing downstream plants so that they can process wet phosphate concentrate will result in a slower rise in capacity than what some are expecting,” says Persona.   

The new plants that are ready include a phosphoric acid train as well as an integrated plant that will also produce fertilisers.

Geographic advantage

Morocco’s geographical location also allows it to target several key markets that lie west of the Suez Canal, including North and South America, as well as Europe.

World consumption of P2O5 in fertilsers (Million tonnes)
2013 2017
40.7 45
P2O5=Phosphorous pentoxide. Source: US Geological Survey

“[CRU] sees the US and Brazil as potential competition, but both will need to invest in new mines to be able to achieve this in the long term,” says Persona. “Morocco has a real opportunity now to fulfill its potential and become a global power [in phosphates].”

With Morocco targeting the west of Suez, Saudi Arabia is looking to target growth markets west of the canal.

Saudi Arabian Mining Company (Maaden) is investing heavily in its phosphates sector and is now regarded as the third pillar of Riyadh’s industrialisation strategy alongside Saudi Aramco and Saudi Basic Industries Corporation (Sabic). The kingdom’s 750 million tonnes of phosphate reserves are modest in comparison with Morocco, but they are being utilised to maximum effect.

Saudi push

The first phase of Maaden’s phosphates strategy was the $5bn 3 million tonne-a-year (t/y) fertiliser plant that started operations at Ras al-Khair in the Eastern Province in 2011. This will be followed by the $7bn Waad al-Shamal phosphates city in northern Saudi Arabia, which will produce 3 million t/y of fertilisers as well as 440,000 t/y of downstream products that will be used in food, detergent and animal feed production.

[Morocco’s OCP Group] is starting to focus on downstream now more than traditional markets and this is only going to increase in the future

Alberto Persona, CRU Group

There was concern when the first phase started production that the market could be flooded with so much fertiliser capacity coming on stream. However, Maaden earned plaudits in the market for the way it managed the integration of its Ras al-Khair plant without causing downward pressure on prices.

Waad al-Shamal may cause more oversupply problems and this is likely one of the main reasons why the US’ Mosaic, the world’s largest phosphate fertiliser company, took a 25 per cent share in the project’s second phase.  

Mosaic realised that rather than directly compete against Maaden in India, it was better to team up

“Mosaic taking a quarter share in Waad al-Shamal came as a surprise to many and while it underlines the growing influence of Maaden, it is also a great coup for them,” says Persona. “This second phase will have to find more natural markets to sell into and the obvious choice is India.”

Mosaic realised that rather than directly compete against Maaden in India, it was better to team up and make sure a fair proportion of Waad al-Shamal’s offtake was kept safe and predetermined.

Jordan limited

Unlike Saudi Arabia, Jordan’s domestic phosphates sector does not have the requisite natural resources to sustain a massive downstream network and as a result is mostly geared towards the export of phosphate rock.

Jordan Phosphate Mining Company (JPMC) exported more than 3.4 million tonnes of phosphate rock in 2013 and produced more than 1.5 million tonnes of downstream products.

The lack of natural gas has forced JPMC to look overseas for strategic partnerships with companies, where Jordanian phosphate rock is imported and converted into downstream products. Full production of phosphoric acid is expected to start at one such plant in Indonesia – the PT Petro Jordan Abadi Company – by the end of 2014.

Elsewhere across the Mena region, the phosphates sector of several countries has been hit by the recent Arab Uprisings or in Iraq’s case, the war of 2003.

Affected by unrest

Prior to 2011, Tunisia had a robust phosphates industry that stretched back for well over a century. The industry is controlled by Compagnie des Phosphates de Gafsa (CPG) and is centred in the Gafsa region of the North African state.

Such is the importance of phosphates to the region that 60 per cent of Gafsa’s GDP comes from the mining and processing of the resource. However, pre-2011 production of 7.5 million t/y dropped to 3.3 million t/y in 2013.

The root cause of this drop in production was continued industrial action by workers in the region, especially in the rail sector. Despite this, CPG has increased its workforce from 5,500 to 9,000 since 2011. However, this has also caused acrimony, with accusations of corruption and favouritism when allocating these new positions.

Other African nations such as Egypt and Algeria have phosphates assets, but there are no plans in place to ramp up production in any significant way. This is in some part due to other priorities elsewhere or a lack of desire to compete against regional powerhouses such as Morocco or Saudi Arabia.

Obvious potential

The only country with the potential to compete is Iraq, although any foray into the phosphates sector would be at least 6-8 years away. Iraq does have two sites with large phosphates deposits and the quality of the reserves is good. Iraq also has the natural resources to drive significant fertiliser and phosphoric acid production.

Looking towards the long termm there is no doubt that Morocco and Saudi Arabia have the potential to become the two leading countries in the global phosphate export market with vast marketing operations on either side of the Suez Canal.

With one world-scale plant already in operation and the Waad al-Shamal phosphates city under construction, it is unlikely that Maaden will commit to a third complex in the short term. However, the kingdom is expected to build at least one more downstream plant within the next decade.

Morocco has a real opportunity now to fulfill its potential and become a global power [in phosphates]

Alberto Persona, CRU Group

The sheer volume of Morocco’s reserves means that further development is inevitable. What will be interesting is to see if the market opens up to foreign investment and would allow industry giants such as Mosaic to take a share in the country’s downstream industries in order to better drive job creation.

With the world’s population growing and fertilisers becoming so important for food security, Morocco and Saudi Arabia are well-positioned to emerge as the two premier global phosphates powerhouses in the next decade. Morocco has the huge phosphate reserves and Saudi Arabia has the natural resources and political will to drive diversification. This combination will be hard for any of their respective rivals to compete against.