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Covid and Ukraine war boost Moroccan phosphate revenues


Written by Gérard Tur on Thursday, March 31st 2022 à 16:10 | Read 170 times


The economic recovery of 2021 and now the Russian-Ukrainian conflict are driving up phosphate prices and increasing volume demand.


Phosphate is becoming an essential source of foreign currency for Morocco. Photo OCP
Phosphate is becoming an essential source of foreign currency for Morocco. Photo OCP
MOROCCO. The world's number one phosphate producer, with about one-fifth of production, 45% of exports and 71% of known reserves, Morocco's phosphate revenues will explode with the strong economic recovery of 2021, and now the crisis in Ukraine. Between mid-2020 and the end of 2021, prices have more than doubled.
 
A sedimentary rock formed millions of years ago by the accumulation of organic matter at the bottom of the oceans, phosphorus, transformed into phosphate, has become an essential fertiliser, unavoidable and indispensable for world agriculture. It is also used in the textile and pharmaceutical industries.
 
The Kingdom has entrusted a national company, the Office Chérifien des Phosphates, with the extraction and export of this chemical compound. In 2021, OCP has seen its turnover grow very strongly to 84.4 billion dirhams (nearly 8 billion euros), i.e. a 50% increase compared to 2020. A surge fuelled by an exceptional fourth quarter (+84%).

Asmidal is a subsidiary of Sonacotrach which manages a portfolio of companies specialised in the production, marketing and development of fertilisers and phytosanitary products. Photo Asmidal.
Asmidal is a subsidiary of Sonacotrach which manages a portfolio of companies specialised in the production, marketing and development of fertilisers and phytosanitary products. Photo Asmidal.

A price effect doubled by a volume effect

2022 promises to be a record year. On March 4, 2022, Russia imposed on its companies to stop their exports of fertilisers (phosphate, ammonium nitrate...). The price of Moroccan phosphate has risen by nearly 20% since the beginning of 2022. To this inflation is added a volume effect. To compensate for the Russian default, the quantities sold by OCP will also rise sharply. Production should increase from 10.8 million tonnes in 2021 to 11.9 million tonnes in 2022 and probably 15 million tonnes in 2023.

This surge in phosphate export revenues must be put into perspective. At the same time, Morocco is confronted with a strong growth in basic products that it imports massively, such as oil, gas and cereals.

Algeria is also positioning itself on this lucrative market. The country has just relaunched the "Integrated Phosphates Project" with the creation of the Algerian Chinese Fertilizers Company. ACFC is owned by the public group Sonatrach, via its subsidiary Asmidal, the mining company Manal (Algeria), and its counterparts Wuhuan and Tian'an, both Chinese and holding 44% of the capital. It will invest seven billion dollars to mine phosphate, then transform it into fertiliser in the east of the country. It will then be exported from Annaba after an investment in logistics of 5 billion dollars. Algeria plans to move from zero to five million tonnes of phosphate products annually.



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