EDITOR: | July 13th, 2013

Phosphate in North Africa: Morocco’s troubles, Tunisia’s strikes, Algeria’s hopes and Mali’s ceasefire

| July 13, 2013 | No Comments

If you follow phosphate, keep a close eye on what is happening now in Morocco, home to more than half of the world’s rock phosphate resources. A major coalition partner has left the government in protest at proposed subsidy cuts that came into effect during the week. Morocco’s ruling Islamists are in need of a new ally after their main coalition partners made good on their threat to quit the government, raising the possibility of early elections.

Here’s a comment from Roger Bade at London’s Whitman Howard brokerage: “This will have to be watched as Morocco is the world’s largest exporter of phosphates and is the last North African producer not to suffer from riot production disruptions. It seems a daft time of the year to upset people, why not do this in December when it isn’t as hot?”

The Party of Justice and Development came to power after coming through strongly in 2011’s parliamentary elections held in 2011; that poll was seen as the monarchy’s response to the “Arab Spring” protests which had by then spilled over into Morocco. But now the nationalist Istiqlal Party has quit the ruling coalition complaining its partner has failed to solve pressing social problems — the very social problems that have caused unrest across northern Africa.

This all comes as Morocco works on plans to double phosphate output through opening three new mines. If this plan — or even present production levels — are disrupted, then that could see global phosphate supplies squeezed with obvious price ramifications.

There is also another problem: there are growing noises from Algiers suggesting renewed antagonism over Western Sahara. Algeria for 30 years has backed the Polisario Front, the organisation battling for self-determination for Western Sahara, the former Spanish colony seized by Morocco. As the Christian Science Monitor reported earlier this year, Morocco’s Office Cherifien des Phosphates (OCP) operates a mine in the disputed territory, Boucraa, which produces 2.5 million tonnes a year of phosphate. Well, it seems from news reports that, to quote one, there is now occurring “an outburst of hostile rhetoric between Morocco and Algeria (reflecting) a historic animosity rooted in irreconcilable differences”  over Western Sahara.

The OCP is Morocco’s largest industrial company which controls more than half the world’s phosphate reserves. The company employs 18,000 people and indirectly supports more than 40,000 jobs across Morocco. It accounts for 3.5% of Morocco’s GDP.

The political trouble coincided with an announcement from Morocco’s mining minister Fouad Douiri that he plans for the mining industry to double the number of people it employs by 2025.

Meanwhile, in Tunisia strikes continue to hamper the phosphate sector. However, a new $498 million phosphoric acid plant has started operating in the country. It’s a joint venture between Indian fertilizer maker Coromandel International and Tunisian state-owned entities Groupe Chimique Tunisien and Compagnie Des Phosphat De Gafsa. Indian news reports say the plant will use around 1.4 million tonnes of Tunisian rock phosphate per year, producing 360,000 tonnes of phosphoric acid annually.

And neighbouring Algeria has now invited Indian companies for undertaking a feasibility study for cooperation in its fertilizer sector. The proposal was reportedly made by a Algerian trade delegation visiting New Delhi. The Algerians told the Indians that some 800 billion tonnes of phosphate reserves remain to be exploited in the country. Algeria also plans to increase its phosphate processing capacity by 5 million tonnes.

And long-troubled Mali may also be a phosphate player. Several attempts have been made over the years. As reported here on InvestorIntel last month, Great Quest Metals (TSX.V:GQ) has welcomed the recent ceasefire agreement between the Malian government and the Tuareg rebels. The company owns the 1,206 sq km Tilemsi phosphate project in that country.

Nearby lies the Samit phosphate project owned by Australia’s Oklo Resources (ASX:OKU). Its permit covers 8,000 sq km and includes 185km of outcrops of phosphate-bearing shale.

Back in 2009, when Oklo first became interested in phosphate in Mali, it put together an interesting backgrounder. The key facts were that a small phosphate mine had operated in Mali from the late 1970s until the early 1990s. The Tamaguilelt mine was located on the same phosphate formation that Oklo had picked up.

The company was convinced that there was a substantial market in Mali and neighbouring states for phosphate rock. In 2009 Mali imported 70,000 tonnes of fertilizer, but the country was not able to utilize its arable land: only 10% of the 2.7 million hectares of arable land was being fertilized. The phosphate mined at Tamaguilelt was used as fertilizer in Mali’s cotton, groundnut, rice and sugar cane industries.



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