Morocco’s phosphate giant OCP put to test as Africa’s fertilizer market heats up

Al-Monitor Pro Members

Francisco Serrano

Journalist and analyst specialized in North Africa

Mar. 13, 2023

Morocco’s phosphate producer, the Office Chérifien des Phosphates (OCP), has seen its turnover jump to a record  Dh114.57 billion ($11.034 billion) in 2022, driven in large part by a spike in global phosphate and fertilizer prices which peaked last April. With 70% of global phosphate reserves, OCP is one of the world’s largest industry players, gobbling up some 31% of the global phosphates trade. The company operates across four continents but its expansion has been most notable in Africa. That said, other global players have also taken an interest in the African market in recent years, with fertilizer producers from countries such as Saudi Arabia and Russia now competing for a larger share of the pie, especially to the east of the continent. In this context and as price volatility looms, OCP’s dominant position, especially in Africa, will be put to the test in the coming months and years.

Scenario 1: Prices for phosphates and fertilizers rise again over 2023-25. Chinese exports remain limited, as do supplies of fertilizer inputs from Russia and Ukraine.

For Morocco and OCP, the status quo continues: high export earnings, with phosphate and associated products remaining the kingdom’s top export segment. Political support for the sector, alongside the low chance of labor disruptions (in its Moroccan units), means that OCP continues to boost production (the firm is targeting a fertilizer output of 20 million tons by 2027 up from 12 million tons in 2021), benefit from price peaks, and pursue its expansion plans in Africa and other large-scale fertilizer markets such as India and Brazil.

Other phosphate firms such as Saudi-based Ma’aden use their own increased revenues to pursue their African expansion, competing with OCP, especially in southern African countries. But Russian phosphate producers remain limited by sanctions. Overall, higher prices will drive expansion of fertilizer companies in Africa, rising the competitive bar for OCP. However, the company’s localized production capacity and overall scale, allow it to remain a leader in the African market.

Scenario 2: Prices fall back to their pre-2021 levels over 2023-2024.

Morocco’s phosphate export earnings take a hit, losing the industry its leadership position as the country’s top exporter. Although turnover is reduced and some investment plans might be sidelined, OCP maintains its standing as a key player at home as well as in the global phosphate trade. Thanks to a diverse supply chain and growing production network, it will be easier for OCP to adapt supply to lower prices and retain its market share than for other manufacturers without an embedded presence in fertilizer markets, especially in Africa where OCP’s advantage is likely to grow under these circumstances. Lower prices could make it less appealing for producers such as Ma’aden and Phosagro to pursue aggressive expansion plans on the continent, especially in countries where OCP is well-established. But the Russian and Saudi competitors will continue to mount significant competition through exports into markets in east and south Africa, where OCP has less of a foothold. This scenario looks to be the least likely, as global demand for fertilizers will probably keep prices above 2020 levels in the short-term.

Francisco Serrano is a writer and analyst who focuses mainly on North Africa. He has been published in several outlets, including Foreign Policy, World Politics Review and the Middle East Institute. His second book, "As Ruínas da Década," about the past decade in the Middle East, was published in March 2022.