2023-07-05 11:23:00
(Agence Ecofin) – At the end of last week, several international media relayed the news of the discovery of a deposit of phosphate rocks of 70 billion tons in Norway. If the European Union has already welcomed the discovery, the information should not only make people happy, especially in Africa.
Morocco, currently the world’s second largest producer of phosphates, behind China, has reason to worry regarding the discovery in Norway of a deposit with an estimated potential of 70 billion tonnes. According to a report published in early July on Ecofin Pro, the platform of the Ecofin agency dedicated to professionals from several sectors, if the potential of this project were to materialize, the Moroccan economy would be negatively impacted. Phosphates are indeed the main product of the Moroccan mining sector, which in 2020 represented more than 20% of exports and around 10% of GDP.
Morocco held 70% of the world’s phosphate reserves until today.
If it is the dolphin of China in the ranking of the world’s largest phosphate producers with 38 million tonnes produced in 2021, Morocco is the country which until then had the largest reserves of the raw material used in fertilizers. , but also in the energy (solar panels) and automotive (lithium iron phosphate batteries for electric vehicles) sectors. Citing the USGS as a source, the report indicates that Moroccan reserves totaled 50 billion tons in 2021, or more than 70% of the 71 billion tons of known world reserves at that date. Its first pursuer harbors barely 3.2 billion tonnes of reserves.
Thus, the arrival of a new competitor with such large production capacities can upset the hierarchy on the market and impact prices. The fact that this competitor is European, with free access to the different markets of the Union, might also deprive Morocco of a major customer represented by the EU. The Cherifian kingdom represents 28% of imports from the European Union and is even the leading supplier of phosphate in the Euro Zone, far ahead of Russia (16%).
While OCP, a state-owned company in charge of phosphate production, launched a program in December 2022 to increase its capacity, the report written by Louis-Nino Kansoun explains that the development of the Norwegian project is a risk to be taken into account by managers.
Still gray areas and time to readjust strategies
If Morocco has to take into account the potential threat that is looming, the report indicates that the Cherifian kingdom has, in the short term, no reason to be alarmed. While several media have compared the 70 billion tonnes to the 71 billion tonnes of known world reserves, the author believes that caution should be exercised in how this statement is received. Already because it is not specified whether it is a question of resources or reserves, and above all because there are still gray areas and a lack of data to understand the estimate.
According to the Ecofin Pro survey, the project on which Norge Mining is working is a set of several deposits, the most advanced of which at present are 3 in number. On the Øygrei deposit, the company declared resources total of 1.55 billion tonnes for an in situ value of 55 billion euros, which resources would contain vanadium, titanium and phosphate. The second, called Storeknuten, would host mineral resources estimated at nearly one billion tons. On the third in Skeipstad, an estimate is awaited.
“These figures are very far from the 70 billion tonnes mentioned recently in the media”, can we read in the document which indicates that the explanation according to which the geologists “have only evaluated a third of the volume, at a maximum depth of 1,500 meters, because it is currently impossible to drill at depths of 4,500 meters”, does not provide more convincing answers.
However, even if the resources are not confirmed in the announced proportions, there is no doubt that Norge Mining is on a big project capable of shaking up the world hierarchy. However, it will take time to realize this potential, and this time, which might amount to several years, should be used by Morocco and other producing countries on the continent (Tunisia, Senegal, Togo, etc.) to readapt their business strategies.
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