OCP seals deal to build $3.7bn fertiliser plant in Ethiopia

Ethiopia, one of the world’s fastest growing economies
Ethiopia, one of the world’s fastest growing economies, currently uses 57kg of fertiliser per hectare of wheat and 34kg per hectare of corn, OCP said. Corresponding figures for Europe are 150kg and 300kg respectively.

Morocco’s Office Cherifien des Phosphates, the world’s largest phosphate exporter, has signed a deal with Ethiopia to build a $3.7bn fertiliser plant in the east African country.

OCP, which is 95 per cent state-owned, said the deal was among the largest joint ventures in Africa between two developing economies and would create one of the world’s largest fertiliser facilities, with an initial capacity of 2.5m tonnes.

The plant, which is expected to start producing fertiliser in mid-2022, will make a significant difference to Ethiopia’s agriculture sector, which accounts for 45 per cent of the country’s gross domestic product and 90 per cent of its exports.

Ethiopia, one of the world’s fastest growing economies, currently uses 57kg of fertiliser per hectare of wheat and 34kg per hectare of corn, OCP said. Corresponding figures for Europe are 150kg and 300kg respectively.

The low use is partly because all Ethiopia’s fertiliser is imported and the government, which controls much of the economy, has significant shortage of foreign currency.

The investment will involve building the plant in Dire Dawa, 250km east of the capital Addis Ababa, and developing infrastructure at Djibouti harbour for handling the phosphoric acid, which will be shipped from Morocco. The nitrogen and potash, the two other main ingredients, will be supplied by Ethiopia.

OCP is hoping to increase its fertiliser production to 12m tonnes by 2017 from 7m in 2014, which would make it the world’s leading producer. It reported a 23.2 per cent fall in first-half net profit to Dh3.07bn ($317m) which it attributed low international market prices.

The company said the first phase of the Ethiopia project will involve an investment of $2.4bn, with 60 per cent coming from debt financing and the rest in equal shares from the two partners. The second phase will involve a further investment of $1.3bn and will increase the capacity of the facility to 3.8m tonnes by 2025.

When at full capacity production is expected to more than meet all Ethiopia’s demand with the excess being exported.

OCP said the facility has “the potential to transform the [agriculture] ecosystem”.

Mustapha El Ouafi, managing director OCP Group, said the state of the art industrial facility will allow Ethiopia to be self-sufficient in fertiliser production.

“This joint venture will bring a range of affordable custom fertiliser products that are specifically adapted to the needs of local crops and soils, thereby ensuring a reliable and affordable supply of plant nutrients to Ethiopia’s farmers,” he said.

“This partnership is firmly rooted in a shared vision of Morocco and Ethiopia’s leadership that African natural resources should be harnessed to drive Africa’s development and common prosperity.”

Faisal Benameur, general manager OCP Ethiopia, said the company was not concerned by Ethiopia being under a state of emergency as the regime tries to end a year of anti-government protests in the Oromia and Amhara regions. “It’s time for Africa to trust Africa,” he said. “This is a long-term commitment. This is an Ethiopian project benefiting Ethiopia.”

Source: FT.com

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