Morocco has been called the Saudi Arabia of phosphates, not such an impressive boast you might think, until you know that the chemical is vital for modern fertiliser as well as an important ingredient in processed foods and certain batteries. Also just like oil, analysts talk of peak phosphate production; many predict this will be in the next 30 years, with reserves only lasting another 100 years. The US is expected to run out of the mineral much sooner. As the US produces around 17 per cent of the world total, running out will leave the US – one of the worlds’ leading agricultural producers dependent on foreign supplies of phosphate, creating a parallel to the dependence the country has on Middle Eastern oil supplies.
Phosphate is a vital part of modern fertiliser along with nitrogen and potassium – these nutrients combined created a revolution that massively increased yields and allowed world food production to soar. Unless alternatives are created, humans are dependent on fertiliser to grow food to support the world’s vast and growing population.
In the near future much of the world’s supply of phosphate could well be coming from Morocco – the country supplies a large proportion of the current world supply and crucially has the largest reserves, putting in a powerful position as other reserves run low.
Negotiators for the Moroccan Office Cherifien des Phosphates (OCP – the state monopoly supplier) have already started to use their power. Phosphate is traded privately and in an “old fashioned” way rather than using futures contracts. OCP have been accused of arrogance in negotiations with buyers, a consequence perhaps of their growing power.
Having huge phosphate reserves may seem like a blessing, giving Morocco a bright future and massive bargaining power with buyers of phosphate. There is a complication however as the best reserves are based in Western Sahara aka the Sahwari Arab Republic. Western Sahara is a disputed territory, when the Spanish left in 1975 the Moroccans moved in. King Hassan II led 350,000 of his countrymen to settle in the country in the so called “Green March”. An independence movement called Polisario sprung up, backed by Morocco’s neighbour and rivals Algeria. Polisario fought a guerrilla war until a ceasefire in 1991. Since then US sponsored talks have dragged on as both parties have been unable to agree on a proposed referendum. Morocco has remained outside of the African Union, which recognises Western Sahara’s right to self-determination. The uncertainty around sovereignty has discouraged oil explorers and has damaged Morocco’s standing in African states.
Morocco could be a leader in phosphate production putting in a powerful position, but this could be undermined if the Western Sahara issue is badly handled – while outright independence looks unlikely for the territory, some kind of compromise will have to be decided upon in order to prevent another conflict.
Categories: Kula Ring Trade Blog