OCP, the South-South partnership as a strategy
The Cherifian Phosphate Office (OCP), the world’s leading exporter of phosphate ores, is also the spearhead of Morocco’s South-South cooperation policy. Which is precisely at the heart of the Kingdom’s continental expansion strategy….
At the beginning of June, the OCP Foundation announced the signing of two new agreements with its Spanish counterpart « Mujeres por Africa » (Women for Africa), in order to work to improve the living conditions of women in Africa. The two foundations are to launch a new project to improve agricultural research in Senegal, through the training of Senegalese women researchers and doctoral candidates specializing in sustainable agriculture at the Mohammed VI Polytechnic University of Benguerir.
A news that could be relegated to the category of actions carried out by the group as part of its social and environmental responsibility policy… if it was not precisely at the heart of the strategy of the Cherifian public company. Morocco’s leading company in terms of revenue (MAD55.9 billion in 2018 - $5.95 billion - ahead of Maroc Telecom), OCP, 95% owned by the State, is in fact one of the driving forces behind the Kingdom’s South-South cooperation policy in Africa and certain Asian countries. A calculated approach that includes positioning on fertilizer production, a highly strategic sector for Morocco and Africa, where agriculture is the key to development.
As Mother Nature has endowed Morocco with the world’s largest reserves of phosphorite - essential element for the production of phosphate fertilizers - (50 billion tons according to the United States Geological Institute, representing 70% of the world’s reserves), ten years ago, as part of its Morocco Plan - its roadmap for agricultural development - the country developed expertise in soil fertility mapping, with a view to promoting sustainable agriculture through the use of fertilizers adapted to different types of soil. Starting from this national base, the OCP group (chaired since 2006 by Mostafa Terrab), and taking advantage of the surge in phosphate prices on world markets, decided to diversify and increase its production. A successful gamble: in barely a decade, the company has established itself as the world’s largest producer of natural and derived phosphates, with nearly 30% of the market. Africa, very logically, is a land to be conquered to sell the ever-increasing production volumes of the Moroccan mastodon: it is with this in mind that OCP Africa, the subsidiary exclusively dedicated to the continent, is launched in 2016. Unlike its competitors, it is not limited to the construction of fertilizer plants, but is a sustainable partner in the countries in which it is established, thanks to the dissemination of Moroccan know-how and knowledge in agricultural matters, and the implementation of socio-economic development projects to support rural populations.
« As an African group firmly committed to the development of South-South cooperation, we put Africa at the heart of our growth plan, » says OCP’s website. in general terms, the model adopted is simple: by acting on the entire value chain (from supporting small producers to building turnkey plants and electrifying rural areas), notably through strong bilateral state cooperation, OCP mechanically sells more of its products and expertise.
In concrete terms, in the 14 countries1 where the Office is present, it will build fertilizer plants to supply the local market and train small farmers and other targeted cooperatives in good practices. According to the group, several hundred thousand farmers in total have already benefited from the projects initiated by its African subsidiary.
A good illustration of this strategy is the partnership with Ethiopia. Following King Mohammed VI’s visit to Addis Ababa in 2016, the group concluded an agreement with the Ethiopian Ministry of Industry to develop an industrial megaproject, including an integrated world-class platform for fertilizer production in Ethiopia. This project, which will mobilize in its first phase an investment of 2.4 billion dollars for a target of 2.5 million tonnes/year of fertilizer by 2022, should enable Ethiopia to be « self-sufficient in fertilizer, with export potential ». The second phase of OCP’s Ethiopian plan, an additional investment of $1.3 billion planned for 2025, for 3.8 million tonnes of fertilizer per year, will meet local demand.
The approach has since been successfully replicated elsewhere on the continent, with the latest agreements signed for the creation of an industrial platform for the production of ammonia and related products in Nigeria (estimated investment of $1.5 billion) and the launch of an agricultural caravan in Rwanda, with the aim of producing a soil fertility map for the establishment of a 50,000 ha pilot area in the northwest of the country. Also in the pipe, the construction of a fertilizer production plant in Ghana, announced for 2020.
A policy of cooperation and exchange of know-how is certainly good for the business: fertilizer sales on the continent have increased from 1.7 million tonnes in 2016 to 2.5 million tonnes in 2017. And this is only the beginning. Through its various projects on the continent, OCP hopes to increase its fertilizer production fivefold (currently 5 million tonnes/year) and thus increase its share of the continental market to 65%. This will further strengthen Moroccan economic diplomacy on the continent and… reinforce the status of the OCP as the undisputed world leader in phosphate.
1Côte d’Ivoire, Senegal, Cameroon, Benin, Democratic Republic of Congo, Angola, Tanzania, Zambia, Zimbabwe, Mozambique, Kenya, Ghana, Ethiopia and Nigeria
1Côte d’Ivoire, Senegal, Cameroon, Benin, Democratic Republic of Congo, Angola, Tanzania, Zambia, Zimbabwe, Mozambique, Kenya, Ghana, Ethiopia and Nigeria