OCP Africa intends to build upon its East African inroads

By Estelle Maussion

Posted on Thursday, 9 February 2023 13:55
Mostafa Terrab, head of OCP. © HOC.

In East Africa, the Moroccan group headed by Mostafa Terrab, the continent's leader, is facing growing competition from Saudi giants in fertilisers and chemicals. We explain.

With the commissioning of blending units in Ethiopia, the launch of a similar project in Tanzania, and the ministerial meeting and visit to commercial farms in Zambia, things are going well for OCP in East Africa.

The continent’s leading fertiliser supplier, well ahead of the Russia-based PhosAgro and the Saudi-based Ma’aden, the Mostafa Terrab-led Moroccan phosphate (since 2006) is stepping up its efforts in the sub-region.

Continental strategy

As a result of its continental strategy implemented by OCP Africa, its Africa-focused subsidiary, it is also a response to the strengthening of competition arising out of Saudi Arabia.

While OCP’s East African interests are not new, they have been strongly confirmed as of late. At the end of January, on the sidelines of the Dakar 2 food summit, the meeting between Mostafa Terrab and President Samia Suluhu Hassan of Tanzania was fruitful.

A blending unit with a capacity of 100,000 tonnes (and at least 25,000 tonnes of storage capacity) should see the light of day by the end of the year near the port of Dar es Salaam, whereas OCP’s local 20-person subsidiary – as many as in Ethiopia and Kenya – intends to deploy several mechanisms to support farmers such as farmers’ houses, local input stores, school labs, and mobile soil analysis.

Fertilisers adapted to local needs

At the beginning of February, Mohamed Anouar Jamali, head of OCP Africa, led a mission to Zambia, where OCP Africa is expected to grow by 10 people this year. While only one fertiliser formula is used in the country, the Moroccan official, upon meeting with Ruben Mtolo Phiri, Minister of Agriculture, and visiting farms with maize yields identical to those observed in Europe, emphasised OCP’s objective: to adapt fertilisers to the needs of soils and farmers.

Jamali intends to continue his field visits to Malawi and Sudan in the coming weeks, as well as Angola, DRC, and West Africa, upon welcoming the imminent inauguration of three blending units in the area (with two in Ethiopia in February and one in Rwanda in July).

This East African activism is part of OCP’s long-term strategy. Formalised in 2016 with the creation of OCP Africa, it focuses on the local production of fertilisers and support for farmers to build an ecosystem ensuring food security and sustainable agriculture.

This approach leads the group, in which the Moroccan state is a 94% shareholder, to combine commercial growth and development projects around the theme of fertiliser customisation.

It is in this context, when the Covid-19 pandemic and then the war in Ukraine have together resulted in higher input prices and additional supply-side difficulties, that OCP promised to reserve four million tonnes of fertiliser for Africa this year while having already made available free of charge or at preferential rates some 550,000 tonnes of products last year.

Ethiopia, a strategic market

Although it targets the entire continent, this strategy took care, very early on, to target the eastern region, in particular Ethiopia. It is one of the two strategic markets in the sub-Saharan zone (excluding South Africa) due to its size and its already significant fertiliser consumption: 36.2kg per hectare of land.

This explains why in 2016 OCP launched in the country’s second most populous city, Dire Dawa, a $2.4bn industrial megaproject aimed at producing 2.5 million tonnes of fertiliser per year.

This also helps to understand why the group made Addis Ababa one of the main recipients of its donations (100,000 tonnes), without forgetting the rest of the region with overtures towards Kenya (65,000 tonnes), Tanzania (42,000 tonnes), Rwanda (32,000 tonnes), and Malawi (27,000 tonnes), according to data from the specialist firm Afriqom in mid-September 2022.

Continental battle

Although OCP does not subscribe to this thinking, its heightened attention vis-à-vis East Africa also indicates a reaction to the increase in competition in the area with the breakthrough of fertiliser producers from Saudi Arabia, primarily Ma’aden.

Admittedly, the public company listed on the Riyadh Stock Exchange remains a small player compared to the Moroccan giant, but it is nevertheless a solid challenger at the continental level, in the same way as the Russian PhosAgro.

While the latter spurred OCP in South and West Africa, Ma’aden, led since February 2022 by Robert Wilt (an American expert in the mining sector), did the same in East Africa, a natural market for it because of its geographical proximity.

“In just a few years, Ma’aden has seen its sales in East Africa increase by more than 80%,” underlined Khalid Al Mudaifer during a 2018 visit to Kenya, the boss of the company at the time, who has since become Deputy Minister of Mines.

The following year, with the acquisition of Meridian, a Mauritius-based distributor, Ma’aden consolidated its presence further south, securing a network of assets in Malawi, Mozambique, Zimbabwe, and Zambia.

In its 2021 activity report, the Saudi group claimed an 80% market share in East Africa, more than doubling its sales of phosphate fertilisers since 2019. In May 2022, Ma’aden announced the creation of a regional office in South Africa to strengthen its presence in the eastern and southern regions.

A Saudi ambush

“OCP has gone ahead and used donations, which Ma’aden does not do. We are nevertheless heading towards a great battle, the two players having colossal means,” states a source, knowing that a third player, the Saudi chemical giant Sabic, has also unveiled ambitions.

At the beginning of 2022, the latter paid out $320m to buy 49% of the Kenyan-based agribusiness conglomerate ETG’s fertiliser subsidiary, ETG Inputs Holdco Limited (EIHL).

While waiting to see what Sabic intends to do in the area, the competition between OCP and Ma’aden is taking place. After experiencing legal trouble in Kenya between 2018 and 2019 for non-compliance with mercury shipment standards, the historic stronghold of Ma’aden, the Moroccan group signed there, at the end of 2022, a partnership with the Ministry of Agriculture to develop soil mapping while multiplying the deliveries of inputs.

With four boats sent to Nairobi last year – against three for Ma’aden – OCP has already made two deliveries at the start of 2023, according to data from Afriqom. Growth in competition is on the way.

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