The Phosphate In The Moroccan Industry Economics Essay

The resources of Moroccan economy based on agriculture, phosphate, and tourism, and also sales of fish and see food plays a major role in economy of Morocco. Industry and mining contribute about one-third of the annual GDP “gross domestic product” which means all revenues earning by a country in the last twelve months period. As you know in the worldwide Morocco is the world’s second or third-largest producer of phosphates after United States and China.

In this assignment I will explain and focus about the phosphate and the major role of phosphate in the economy of Morocco, because phosphate mining in Morocco is responsible for more than half of the nation’s income, which very important for growing and developing the economy of morocco.

The phosphate industry in Morocco

As you know Morocco is one of the largest countries of producing and exporting the phosphate in the world wide. Morocco phosphate is perhaps the most important mineral in the country, having diverse usages. The production of phosphate in Morocco is carried out in the four mining centers in the country, namely Youssoufia, Boucraa, Khouribga and Benguerir. The mines in Khouribga functions on the basis of the Oulad Abdoun deposit of phosphates, found about 140 kilometers south-east of Casablanca. The extraction potential of this mine is around 17-18 million tons annually. The phosphate ore extracted from this mine forms the basis of exporting them in foreign lands. Moreover, the ores also offer considerable support to the new chemical industry located in Jorf Lasfar The production of Morocco phosphate is owned and controlled by OCP, the state-owned company, the OCP group which stands for (office chérifien des phosphates): this group operates on the five continents. Its traditional opening on the international scene since its creation in 1920 quite naturally urges it to permanently develop adjustment, flexibility and anticipation capacities so as to adequately meet customers’ increasingly stringent requirements in a very competitive market(1). The OCP group is one of the largest enterprise in the kingdom and also employs more than 2% of population who work in the group OCP which help to decrease the unemployment in Morocco, because the unemployment affect the economy of the country and the OCP group which owned by the government they have more responsibility of employing as much as they can to help the decreasing of unemployment, and also this group help the employees to do training with the development of the technology.

Morocco houses approximately 2/3 of the world’s phosphate reserves, putting it in a higher league than major competitors China, Russia, and the United States, and this table will show you more details about the reserve of phosphate in Morocco and other countries which producing the phosphate:

Of the four major producers, Moroccan reserves account for around 50% of the world total. With Phosphate consumption growth estimated at 1-2% per year, global phosphate reserves extend, for

All intents and purposes well into the future, for centuries. Meanwhile, depletion of the most economically exploitable reserves can be estimated to occur within a period of 100-130 years. (2)

Morocco takes measures to cut phosphate prices in the third of June 2008 because the general director of OCP Mr. Mostafa Terrab announced on Monday (June 2nd). Using an estimated $4m in investment, Morocco plans to increase phosphate production from 30 to 55 million tons per year. Terrab said the measure is expected to bring phosphate prices down from the current $300 per ton to $100. Morocco owns an estimated 50 to 71% of the world’s phosphate reserves.

As you notice from this chart in 2001 Morocco is the second large country of producing phosphate rock in the world after United State, and Morocco produce more than 20.000 tons per year. This is why phosphate helps the increase of GDP in Moroccan economy every year, and also this large huge quantity of production the phosphate in Morocco can put the Morocco as the famous country in the world and to attract many countries to reach their market especially those that not have any business relationship in the phosphate industry with Morocco.

The secretary-general of Morocco’s Finance Ministry Abdeltif Loudyi said in an interview on April 7, 2009 in the Sudanese capital, Khartoum. Morocco will open a special zone for the phosphate industry and hopes to attract 50 billion dirham’s ($6 billion) of investments and also said The North African country will probably hold an international tender to attract investors this year, and build a pipe to transport the phosphate more cheaply.(3)

When Morocco export phosphate to other countries especially to one which too far from Morocco can cost a huge amount of money in transportation, according to this problem Morocco want to use a certain strategy to reduce the cost of transportation and this is why Abdeltit Loudyi went to Sudan to discuss this economic issue of phosphate with the minister of Sudan.

Moroccan phosphate affects economic issues

The phosphate industry actively contributes to the country’s economic development; by it’s presence in five geographical areas in Morocco such as: El Jadida, Safi, and Khouribga… and the phosphate create wealth, provide jobs, offer training, get supplies from and have sub-contracts with a large and famous network of national companies and contributes in the creation of businesses. And also it is keen to ensure the wellbeing of its employees, collaborate with universities and support humanitarian, sport which OCP group is sponsorship with a lot of football teams in Morocco and also help cultural actions.

The most important industrial exports are raw phosphates

And processed products, including phosphoric acid and fertilizers, but Morocco also exports textiles, clothing, and shoes. Although Morocco is the world’s largest exporter of raw and processed phosphates, the phosphates sector overall contributes only 3 percent to the GDP (4), which helps the economy of Morocco to growth every year.

The new agreement adds an industrial dimension, with the companies planning to launch a joint feasibility study into an industrial site to produce uranium from phosphoric acid. And this agreement is signed between Morocco and French this deal it’s very important to develop the economy of Morocco, this agreement which the president of French Nicolas Sarkozy visit Morocco with the purpose to develop the cooperation and research initiatives in the field of natural uranium between the OCP group and other French companies in the same sector.

According to the last statistics which launched in the newspapers the exports of Moroccan phosphate increased by 7.3% in 2002, thanks to the Expansion of deliveries to India, and the 8% rise in purchases by the United States.(5) This increase helps the development of Moroccan economy especially in the mineral industry which increases by 5% this year.

As you notice from the table there is a change between 1989 and 1999 in exporting of phosphate in Morocco to those countries, there is a very decrease of exporting in US by 40%, which can affect the economy of Morocco in a negative way. But there is a huge increase of exporting in Poland by 92% it’s too near to double, this increases help the development of the economy of Morocco in a positive way.

The OCP group launched in the news Morocco exports of fertilizers dropped by 6.2%, and also its exports of phosphoric acid increased by 6.2% and those by a phosphate rock by 13.2% it’s a large increasing, and exports recorded an increase of 8.3%, all those increases confirms Morocco’s position as the world leading exporter of phosphate under all form, with a market share that climbed from 28.2% in 2004 to 30.7% in 2005.(6) Just between 2004 and 2005 Morocco the exports of all types of phosphate increase by 2.5% which good for the economy of Morocco, this also resulted in a record turnover, as it rose to 2.055 billion dollars, an increase of 17.8% compared with the last statistic of 2004, and also a huge increase of 49.34% compared to 2003. This increase of Moroccan turnover can change the economy to grow progressively in the future.

The impact of Moroccan phosphate in the environment

As you know the produce of phosphates can effect the environment of Morocco in a negative way, which means the OCP group when they produces any types of phosphate can affect the environment and increase the percentage of pollution in Moroccan society over the sea or the air.

The main areas of producing phosphates by OCP group are Jorf Lasfar and Safi, on the Moroccan Atlantic coastline; there are chemical industry plants that produce phosphate derivates including phosphoric acid and fertilizers, together with by-products such as sulphuric acid. The liquid effluents of the plants are discharged directly into the sea. In order to evaluate their impact, we have compared the distribution of intertidal macro benthos in several locations, along industry pollution. The results illustrate how biological diversity and species densities decrease abruptly in the vicinity of these industrial effluents, and also how recovery, as measured by the same parameters, proceeds with distance from the discharge points.(7)

But the OCP group mentions in the annual report in 2005, which the group wants to have a good development and the implementation of the first OCP group environmental policy as well as the setting-up of the quality-safety-environment charter on July 20 in the same year 2005, according to this great initiative the group commits itself to contribute further towards improved community conditions life in Morocco.

Morocco plan to develop the production of phosphate

In 2009 Morocco especially OCP group launched a new plan to develop the production of phosphate or to help the phosphate industry by purchasing or using new materials and using new technology which help the production of phosphate to be easily and too quick.

Morocco’s Office Cherifien de Phosphate (OCP), the world’s leading phosphate exporter, said on this year it plans to spend 16 billion Moroccan Dirham’s on chemicals as part of five-year, 22 billion dirham’s development scheme.(8)

The OCP group and also the Moroccan government it would spend the remainder of the money for the 2008-2012 development scheme on modernizing facilities, upgrading infrastructure and increasing capacity to produce phosphoric acid and fertiliser at its Jorf Lasfar site. And also Morocco will increase export of rock phosphate and phosphoric acid to India and has offered India two sites for setting up a phosphoric acid joint venture, the Indian government said on Thursday 27 March 2008: Leading a delegation to Rabat, Chemicals and Fertilizers Minister Ram Vilas Paswan and Moroccan Prime Minister Abbas el-Fassi discussed the prospects of increasing supply of fertilizer feedstock and intermediates as well as investments by Indian firms in the chemicals, fertilizers, steel and automobiles sectors in Morocco.(9) This good deal by the Indian and Moroccan government will help the increased of the exporting of phosphate and reach the market in India because this country spent and imports more than 5 million tons yearly of rock phosphate which include phosphoric acid and diammonium phosphate, this is why Morocco wants to get a good business relationship with India which imports about 1.1 millions tons/year of rock phosphate and 1.2 millions tons/year of phosphoric acid, and Morocco in this two last year wants to increase the export of phosphate to India and also export other types of phosphate which produce by Morocco especially by OCP group, another goal of Morocco and OCP group they want to target and reach other countries for examples: Belgium, Germany, and Italy… and they want to do an agreement between the OCP group and Belgium government, and this agreement include other sectors not the only phosphate.

Morocco’s Office Cherifien de Phosphate (OCP), the world’s leading phosphate exporter, plans to nearly double production in the next six or seven years, a senior executive told Reuters on 28 Wednesday 2009. OCP already controls around 45 percent of the world market for lime phosphate, and controls more than 30 percent of global phosphate exports, according to company data. (10) And also the company wants to remain as the market leaders in the global phosphate business in the future, so the only way to do that is to almost double or production from 30 million tons per year to 54 million, (Ahmed Nabzar), who’s the executive vice president of OCP Group, said in an interview. OCP group last year announced a $12 billion expansion plan for the next seven or eight years. The company has already begun exploring three new mines to achieve its output goals, and expanding those would cost $100 million in the future. And also OCP group with the Support of the Moroccan government they want to increase the export of phosphate to the market including Asia, Europe, and United States…

Conclusion

We know that the United States is currently produce more phosphate rock than Morocco, but an estimated that the phosphate reserve by Moroccan it can nearly six or seven times that reserve by the United States, according to this information and looking towards the future. This puts Morocco in a good place and also in a very advantageous position to become the leading player and reach the international market in the mining of phosphate.

OCP group starts to spend more money in the research and development, training which include education in Morocco or abroad. This strategy it can be very costly in a short-term, and the benefit of it can help the group to earn more profit in a long-term period.