In West Africa, within the phosphate fertiliser market (including NPK), a battle is being waged between the dominant player – Mostafa Terrab’s Moroccan group OCP – and its challenger, PhosAgro, a Russian group headed by Andrey A. Guryev, son of the company’s founder, Andrey G. Guryev.
These two companies are going head to head to determine who will be supplying to markets that are certainly fragmented (cotton in Mali and Burkina Faso, cocoa in Côte d’Ivoire, groundnuts in Senegal, rice in Nigeria, etc.) but have a high potential for growth in the agricultural sector.
A large presence
OCP, which has been exporting to West Africa for a long time and has been established there since 2016 via its subsidiary OCP Africa, has historically dominated in this region.
It is clear that OCP will continue to do so, as five agreements were signed in Nigeria in March. They are aimed at speeding up the installation of a plant that is capable of producing 750,000tn of ammonia and 1m tonnes of fertiliser per year by 2025.
PhosAgro, on the other hand, has been absent from Nigeria ever since the ban on fertiliser imports came into effect in 2018.
Besides Nigeria, OCP – with $6.1bn in turnover in 2020 – has offices in six other countries: Côte d’Ivoire, Ghana, Senegal, Cameroon, Benin and Burkina Faso. The presence of PhosAgro – with $3.5bn in turnover in 2020 – is much more limited, as it manages its activities from Cape Town (where it opened an office in 2020) and its Swiss office in Zug with a team of six people.
OCP, which sourced 24% of its turnover from the continent in 2019, wants to consolidate its leading position by forging a collaborative relationship with West African governments, which would include introducing local distribution and production.
PhosAgro, which reportedly sold 600,000tn in Africa in 2020, i.e. less than 1/10th of its total production, is limiting itself to sales and betting on future growth, without concealing its difficulties (high transport costs, volatility of demand).
PhosAgro, which has been in search of new markets ever since it lost access to the Ukrainian market – due to tensions between Moscow and Kiev in 2014 – has nonetheless had a modest breakthrough. The Russian company set up shop in Burkina Faso in 2016 and has since spread its operations to Mali, Côte d’Ivoire, Ghana, Cameroon and Benin.
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PhosAgro made its mark in Benin by winning the 2019 tender to supply the cotton industry, which had previously been won by OCP.
“There was little competition in these markets despite a great need,” says Roman Kochchouk Baginsky, who left the agricultural commodities trader ED&F Man in 2016 to launch PhosAgro’s African operations.
A stop-gap measure?
“We offer a competitive alternative that does not contain heavy metals,” he says, singling out the advantages of Russian fertilisers over their Moroccan competitors. One of them, he says, is that they have low cadmium content.
PhosAgro has also started shipping its fertilisers to Liberia, the two Congos and Angola. The group’s progress is spurring OCP on, especially since the other Russian fertiliser giant Uralchem and the Saudi Arabian group Maaden – which are already active in East Africa – recently waded into the West African market. Uralchem is particularly active in Nigeria, while Maaden is operating in Mali via Senegal.
However, PhosAgro anticipates that 2021, which promises to be a difficult year for the region, will mark a halt in its expansion. Consequences of Covid-19, delays in launching calls for tender due to electoral deadlines and the sharp rise in fertiliser prices in world markets will have an impact on demand.
“In Mali, for example, the Compagnie Malienne pour le Développement des Textiles launched a call for tenders for 90,000tn of products, compared to more than 300,000tn last year,” says the representative of the Russian group, which – because of the context – did not submit a tender, leaving OCP to take the deal. Once the situation improves, there is no doubt that the competition will resume.
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