Morocco launches $1.8 bln West Sahara investment plan

RABAT Feb 5 (Reuters) - Morocco's King Mohammed on Friday launched a 18 billion Moroccan dirham ($1.85 billion) investment plan in Western Sahara driven by the country's state-run phosphate company OCP, the state news agency MAP reported.
Morocco has controlled most of Western Sahara since 1975 and claims the sparsely populated stretch of desert, which has offshore fishing, phosphate reserves and oilfield potential, as its own territory.
Morocco's annexation of Western Sahara prompted a rebellion by the opposition Polisario Front, which has been backed by Morocco's neighbour Algeria. The United Nations brokered a ceasefire in 1991, but talks have since failed to find a settlement in Africa's longest-running territorial dispute.Rabat invests heavily there, hoping to calm social unrest and independence claims.The plan includes investments of 8.3 billion dirhams in a new fertilizer plant, 4.2 billion dirhams in a new port near the city of Laayoune and 3.1 billion dirhams in other phosphate industrial facilities, MAP said.The plants and the port will be based in the industrial hub of OCP's subsidiary Phosboucraa in al-Marsa near Laayoune, 100 kilometers (62.14 miles) from Phosboucraa's mines.The announcement came few days after OCP, the world's leading phosphate exporter, started production at a new fertilizer plant dedicated to the African market in the Jorf Lasfar area on the Atlantic coast where it invested 5.3 billion dirhams.


The company is building three other units in the same hub with a capacity to produce 1 million tonnes of fertilizer each, it said.

        
OCP, a major earner of foreign currency for Morocco, posted a 66 percent jump in net profit for the first half of 2015 to 3.99 billion dirhams, helped by a strong U.S. dollar.It has invested heavily and made a series of acquisitions to improve its infrastructure and boost output. It aims to raise output to 47 million tonnes of crude phosphate rock in 2017, from around 34 million tonnes in 2013.The company says it wants to become the world's top fertilizer producer by increasing fertilizer production to 12 million tonnes by 2017, up from 4.5 million tonnes in 2010. ($1 = 9.7505 Moroccan dirham) (Reporting By Aziz El Yaakoubi, editing by David Evans)

Global fertiliser market needs price fall to rebalance - PhosAgro

INTERVIEW- Thursday, 4 Feb 2016 | 2:00 AM ET Reuters

LONDON, Feb 4 (Reuters) - Flagging fertiliser prices are set for a further fall which will likely drive some high-cost Chinese producers out of business to help ease a stocks overhang and lift prices later in 2016, one of the world's largest producers, Russia's PhosAgro, said.

Chief Executive Andrei Guryev said he expected prices for phosphate, potash and nitrogen fertilisers to weaken by at least another 10 percent after dropping 30 percent in the past months, a steeper than usual fall during slack winter demand, which sent stocks ballooning, including those in key consumer India.
"The market must bottom out. Prices could fall by another 10 percent in the next few weeks," Guryev said. "We need to reach the bottom first to reduce stockpiles and begin to grow again".
Guryev declined to say whether the price drop would be driven by PhosAgro itself but said the company, which has increased output by about one million tonnes over the last two years to 6.8 million tonnes, would continue growing production.
"Sometimes, it is quite positive for the market to drop one level down because that is the only way to find a lift which will take you up," he said in an interview.
PhosAgro is the world's third-largest producer of phosphate rock, an essential agricultural nutrient. It also sells compound fertiliser, a blend of processed phosphates, nitrogen, potash and often sulphur.
Guryev said he expected prices for key fertiliser diammonium phosphate (DAP) to drop around 10 percent to $320 per tonne on a free-on-board basis, before recovering to $400 later in 2016.
He said the price drop would mostly hurt higher cost Chinese producers. Guryev said he based his calculations on similar developments in 2013, 2010 and 2008, when low prices drove some high cost production out of the market and ultimately led to a rebound in prices.
PhosAgro is one of the lowest cost producers in the world with cash costs amounting to $145 per tonne of DAP compared to an industry average of $370 and Guryev said the company was prepared for any price scenario.
He said his outlook for the global fertiliser market was positive as Indian consumption was racing ahead thanks to low oil prices, which allow farmers to spend more on fertilisers.
Key Latin American consumers such as Brazil have however reduced demand because of steep currency devaluations. "But overall, this is a healthy trend and their business would soon grow again."
He said Russia and the United States would also be strong markets in 2016, giving hope to clear the stocks' overhang, which Guryev said arose partially because China increased fertiliser production by 92 percent in the past 2 years.
"There are no fundamental reasons for weaker prices but people are delaying purchases and stocks are rising. I think it is driven by market fears - declines in stock markets, weaker currencies and declines in commodity prices," he said.
PhosAgro competes directly and indirectly with companies such as Canada's Potash Corp or U.S. Mosaic.
PhosAgro increased production by 10 percent in 2015 as it benefited from a steep rouble devaluation at home while selling in U.S. dollars.
(Reporting by Dmitry Zhdannikov, editing by David Evans)