Al-Qaeda the latest threat to phosphate security
Morocco, as we know, is the key phosphate player with its enormous reserves and being the world’s largest exporter of rock phosphate. It looks to become even more dominant; as reported here on Investor Intel, the country is planning its production of phosphate rock will expand from the present 30 million tonnes a year to 50 million tonnes a year by 2017, while downstream fertiliser production is set to expand from 3.5 million tonnes to 10 million tonnes over the same time period.
But this week we have heard of two developments that could just unsettle and unnerve the phosphate sector. And Morocco.
Here’s the thing: while phosphate prices are subdued, that situation inhibits new mines around the world and leaves Morocco setting the pace. It has the money and skill to increase its production — which will act to keep prices low. However, any interruption to Morocco’s supplies will see the phosphate price climb — and open the door for other projects to get up and running.
It is not just Morocco. As London brokers Libertas set it out in a comprehensive phosphate review: “The North African Kingdom of Morocco alone supplies more than one-third of global exports and the seven politically unstable countries in the Middle East and North Africa (Morocco, Algeria, Tunisia, Egypt, Jordan, Syria, and Israel) have 79% of world reserves and produce 27% of the world’s output.”
So back to those two events.
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News reports say Moroccan petrol prices jumped on Monday as the cash-strapped government began implementing a fuel price indexation system aimed at reining in oil subsidies and plugging a budget deficit, officials said. And then the All-Africa news service — each day it aggregates reports from 130 African news services — has posted that al-Qaeda in the Islamic Maghreb (AQIM) launched a 41-minute provocative video about Morocco which looks like spelling intent to cause trouble in the country.
On the petrol prices front, this will work its way through to food (and other prices) — and no one can forget that the so-called “Arab Spring” was triggered by a protest (and a self-immolation) over rising food prices in Tunisia. We shall have to wait and see whether the Morocco action triggers any demonstrations; after all, the phosphate industry heaved a big sigh of relief when the initial Arab Spring problems did not spread to Morocco although there were fears it might. This week diesel in Morocco rose 8.4% and petrol by 4.3%. The government was left with little choice as its budget deteriorated: fuel subsidies cost it more than $6 billion a year.
According to All-Africa, the internet video mocks the domestic and foreign policy of the country and its efforts to fight terrorism. It also shows an image of the Moroccan monarch engulfed in flames and includes footage of al-Qaeda militants training in the forests and mountains of Algeria, ending with a call for young people to join the ranks of jihadists.
According to Mohamed Darif, a Moroccan researcher specializing in Islamic groups, al-Qaeda has been frustrated and increasingly angered by the fact that — while it has penetrated into Libya, into Egypt’s Sinai and along the Algerian-Tunisian border — it has not managed to acquire a foothold in Morocco. According to terrorism experts, al-Qaeda feels it needs to carry out an operation that will shake the resolve of the Moroccan government.
Political stability is vital to Morocco’s phosphate plans and influence. Shake that stability, and the industry is in a new ball game.
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