Morocco's OCP Group Invites 100% Indian Ownership in New Phosphoric Acid Plants

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Researched by Industrial Info Resources (Sugar Land, Texas)--In recent years, the global increase in demand for food has led to a corresponding increase in demand for fertilizers. With the basis for many fertilizers being phosphate rock and phosphoric acid, it is not surprising that the price of phosphate rock has increased dramatically worldwide from the beginning of 2007, continuing through 2008 and 2009.

The United States Geological Survey summary document for 2009 reports that the average spot price for phosphate rock sourced from the North Africa region in January this year was more than five times the average price in 2007. Second only to China in phosphate reserves, and third behind China and the U.S. in production, Morocco is an important source of both phosphate rock and phosphoric acid.

This month, OCP Group (Casablanca, Morocco) announced that it was relaxing the terms of joint ventures with India and is agreeable to Indian companies establishing wholly owned phosphoric acid manufacturing plants in Morocco. Alternatively, OCP would be willing to establish phosphoric acid plants in India, either alone or through ventures with Indian companies. However, OCP will continue to retain control over mining and export of phosphate rock in Morocco.

Currently, OCP has established joint ventures with several Indian companies in Morocco. Tata Chemicals Limited (BSE:500770) (Mumbai) and Chambal Fertilizers & Chemicals Limited (BSE:500085) (New Delhi) are in an equally split, three-way venture with OCP in Indo Maroc Phosphore SA to operate a phosphoric acid complex, with a capacity of 430,000 tons per year, at the Jorf Lasfar industrial hub.

In another 50:50 joint venture, OCP and Zuari Industries Limited (BSE:500780) (Zuarinagar, Goa) hold an 80.45% stake in Paradeep Phosphates Limited (PPL) (Bhubaneswar, Orissa) through their joint venture company Zuari Maroc Phosphates Limited (ZMPL). PPL operates a fertilizer complex in Orissa, which produces 720,000 tons per year of di-ammonium phosphate.

Di-ammonium phosphate is the second-most widely used fertilizer in India after urea, and is produced from phosphoric acid, which in turn is derived from phosphate rock. Currently, India imports about 2.2 million to 2.3 million tons per year of phosphoric acid, mainly from Morocco, which supplies 1 million tons per year. India also procures 500,000 tons per year of phosphoric acid from South Africa, 300,000 tons per year from Tunisia, 200 tons per year from Senegal, and 150,000 to 200,000 tons per year each from the U.S. and Jordan.

The main supplier of India's annual import of 5.2 million to 5.3 million tons per year of phosphate rock is Jordan, which supplies about 2.5 million tons per year. Morocco supplies about 1.1 million to 1.2 million tons per year, and smaller amounts are imported from Egypt, Togo and Algeria.

Apart from Morocco, India has operating phosphoric acid joint ventures with companies in Senegal, South Africa and Jordan. India is developing a 360,000-ton-per-year phosphoric acid plant in Tunisia, which is set to be commissioned early in 2011. In Senegal, Indian Farmers Fertilizer Cooperative Limited (IFFCO) (New Delhi) and the Indian government hold a joint stake of 19% in the 660,000-ton-per-year Industries Chimique du Senegal complex at Daru, while Coromandel Fertilizers Limited (BSE:506395) (Secunderabad, Andhra Pradesh) holds a 15% stake in the 720,000-ton-per-year Foskor plant at Richards Bay in South Africa. The largest Indian interest in terms of percentage is the 52% stake held by Southern Petrochemical Industries Corporation (BSE:590030) (Chennai, Tamil Nadu) in the 224,000-ton-per-year Indo Jordan Chemicals Company plant in Jordan.

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