North Africa builds its minerals’ future

In 2009, after years of economic prosperity, the annual growth rate in North Africa slowed from 4.4% to 2.6% as a result of the international financial crisis. The region was affected by lower export earnings, investment flows, and remittances.

However, even though the global downturn has not spared the North Africa region, “good economic fundamentals, appropriate policy responses, and sizeable currency reserves are helping to mitigate the impact of the shock”, said the International Monetary Fund (IMF) in its latest assessment of conditions in the region.

North Africa - like Sub-Saharan Africa - owns an enviable panel of valuable resources from oil to metals, also involving industrial minerals. On top of its resources in oil, gas, and iron, the region has a handful of industrial minerals such as barytes, fluorspar, limestone, gypsum and kaolin (see table p.57). In addition there is a growing cement industry (see table p.58), thanks to the housing sector boosted by a growing population.

North Africa is generally recognised as the well-established producer of a more and more popular mineral: phosphate.

Morocco’s OCP plans to transform its
Jorf Lasfar plant (picture) into an international
chemical hub for phosphates and to produce
an extra 20.5m. tpa of phosphate rock by 2016.
Courtesy OCP


“Generally, the industrial minerals market is doing well in North Africa North Africa’s market is doing better than Sub-Saharan Africa because North Africa was less affected by the global financial crises and managed to have higher economic growth, because of projects in hydrocarbon sector which continued to create demand for some industrial minerals,” commented Mostafa Taib, analyst, US Geological Survey (USGS), to IM.

The industrial minerals market is doing well in Algeria, Egypt, and Libya; it is quite stable in Tunisia and performing weakly in Mauritania. “The availability of natural gas made it possible to expand nitrogen and phosphate fertiliser expansion projects and cement plants in Egypt, Algeria and Libya,” revealed Taib.

Phosphate: North Africa’s driver

“North Africa, thanks to its vast reserves of phosphate resources and its geographical location, is an attractive place for phosphate-based industry, ”commented Khalid Siraj Subhani, chief executive officer designate at Engro Corp. Ltd formerly Engro Chemical Pakistan Ltd, which is looking to invest in the region (see below).

Despite a tough year in 2009 which witnessed a 30% drop in phosphate production, North Africa is starting up again, beginning in Q4 2009, according to Michel Prud’homme from the International Fertilizer Institute (IFA).

North Africa has a long history in phosphate mining, going back to up a century ago, and owns two of the world top five producing countries: Morocco (3^rd) and Tunisia (5^th).

In 2008, North Africa produced almost 40m. tonnes of phosphate and plans are being made among its main producing countries Morocco, Tunisia, Algeria and Egypt to dramatically boost production in order to meet the expected increased demand for the fertiliser mineral worldwide in the next few years.

Contrary to its two main competitors, the USA and China which mainly consume their products domestically, North Africa exports most of its phosphate. “Our agriculture is not as developed as in the USA or China,” explained the World Phosphate Institute (Imphos) to IM, the main reason being the challenging weather conditions.

For instance, Morocco’s agriculture accounts for 18% of the GDP, its main sectors being industry and tourism. As a consequence, North Africa exports more than 50% of its phosphate rock worldwide, processing the remaining into phosphate fertiliser and phosphoric acid for domestic use and export.

North Africa’s main phosphate consumer is India. The Asian country, owing to its very poor resources in phosphate and a growing population expected to exceed 1,300m. by 2020, is in desperate need of the fertiliser mineral. According to Imphos, Morocco sent more than 50% of its 27m. tonnes phosphate to India in 2007.

“I see good opportunities for phosphate rock and fertilisers for Algeria, Egypt, and Morocco as the demand for fertiliser is expected to pick up in 2010,” analyst Mostafa Taib, told IM. “I think that Tunisia in particular has a big challenge of maintaining the same levels of production that it used to have in recent years. Tunisia started early in fertiliser manufacturing and mining, with triple superphosphate (TSP) plant starting in 1952, and phosphoric acid plant in 1972. “It seems that other countries such as Algeria and Egypt are catching up with Tunisia and offering similar products to the same market,” he added.


North Africa’s main industrial minerals production (tpa)



Source: USGS, IFA, Ministry of Mines Morocco


Morocco: Phosphate leader

Morocco is the world’s third largest phosphate producer accounting for 16.7% of global output after China (29%) and the USA (18.5%), and before Russia (6.5%) and Tunisia. The country is said to have the largest phosphate reserves in the world.

In 2008, the country of King Muhammad VI produced 24.8m. tonnes of phosphate rock, down from 27.8m. in 2007. Morocco’s phosphate exports were reduced in 2009 owing to the financial crisis which weakened global demand but the production is expected to grow again during 2010.

Almost all phosphate extraction is conducted by the Office Cherifien des Phosphates (OCP), a state-owned company created in 1920 by the Moroccan government.

Since its first rock production in 1922, OCP steadily increased production from 1m. tonnes of phosphate in 1939 to 22m. tonnes in 2008. Its phosphate fertiliser exports increased from less than 100,000 tpa during the 1970s to more than 1m. tonnes in 2006 and phosphoric acid exports increased from 631,800 tonnes in 1990 to 1.5m. tonnes in 2000.

OCP sells its phosphate all over the world: phosphate rock to North America and Europe; fertilisers to Western Europe and Brazil; and phosphoric acid to the Indian sub-continent only since China became phosphate self-sufficient.

The Moroccan company operates four major mining areas in Khouribga, Ben Guerir, Boucraa Laayoune, and Youssoufia. The vast majority of ore is used internally at OCP’s two fertiliser complexes, Safi and Jorf Lasfar, which both contribute to an overall fertiliser output of 4m. tpa, the second biggest in the world after the US Mosaic Co. (9m. tpa capacity) and before Russia’s PhosAgro AG, third with 3m.tpa.

Safi produces over 1.5m. tpa phosphoric acid, 500,000 tpa TSP, 250,000 tpa NPK, and 400,000 tpa MAP. Jorf Lasfar, located on the Moroccan east-coast, outputs 2m. tpa phosphoric acid from 7m. tpa ore mainly supplied by the Khouribga mines.

OCP has planned a few new projects in order to meet the increased need for the fertiliser mineral in the future. For that to happen, in an economic environment affected by the financial crisis which witnessed falling prices, OCP secured in January 2009 a strategic partnership with the Banque Centrale Populaire (BCP) in Morocco in order to reinforce its position as the world’s leading phosphate producer.

The partnership is expected to result in “a better beneficiation of the phosphate rock from 48% to 70%”. In addition, it will transform OCP’s Jorf Lasfar plant, located 100km south of Casablanca international airport, “into an international chemical hub for phosphates”.

Part of OCP’s plans include opening four new mines by 2016 which should produce an extra 20.5m. tpa of phosphate rock. The total investment for the four mines is $1,680m. and should increase total production capacity from about 25m. at present to 45-50m. tpa phosphate by 2020,Êan astonishing figure which matches today’s total Chinese output.

Khouribga, which operates the world’s biggest open pit phosphate mine, will soon be home to three new mines bringing the total to six in the area. The initial phosphate capacity will be raised by 17.5m. tpa, bringing Khouribga production to 36.5m. tpa. The openings of all three mines will be phased between 2012 and 2016. OCP will also open a mine in south Ben Guerir in 2014, producing 3m. tpa (IM February 2009,p.6: OCP phosphates hub).

The first mine, Hlassa, will be in Khouribga and should produce 5.5m. tpa. It is expected to be ready in 2010. The second one, Ouled Fares mine, also in Khouribga, will open in 2012 and will produce 6m. tpa. OCP will then open the third mine in south Ben Guerir in 2014, producing 3m. tpa. The last mine, also situated in Khouribga but in the north central zone, should be ready in 2016 and will produce 6m. tpa.

OCP also intends to invest $720m. to upgrade its processing and logistics by 2020. The company wants to build two pipelines for phosphate rock transportation, a desalination plant and to extend its port of Jorf Lasfar.

At present, OCP’s phosphate is transported by train. This system of transportation will be replaced by two phosphate slurry pipelines, about 200km each, with an annual capacity of 55m. tpa. The first one will connect the site of Khouribga to the chemical plant of Jorf Lasfar which allows vessels with a capacity of 100,000 tonnes. The second pipeline will follow the axis from Gantour to Safi, a town situated south of the port of Jorf Lasfar, on the Atlantic Ocean coast. The first pipeline should be operational in 2012.

In addition, the Libya-Africa Investment Portfolio of Switzerland and the OCP signed an agreement to jointly develop phosphoric acid, and DAP fertiliser plants in Morocco and Libya. Under the $1bn agreement, the two firms would construct a 1m. tpa phosphoric acid plant at Jorf Lasfar in Morocco at a cost of $350m., and a $150m. DAP facility in either Libya or Morocco.

Morocco at a glance

King: Muhammad VI

Capital: Rabat

Population: 32.3m.

GDP growth: 3.4%

GDP: $55,000m.

IM: phosphate (3^rd); barytes (8% of world resources); fluorspar (2% of world resources); bentonite; cement

Fluorspar

Among a range of industrial minerals (see table p.57), Morocco produced about 80,000 tonnes of acid-grade fluorspar, up from 78,900 tonnes in 2007 according to the USGS and mainly sold to aluminium fluoride manufacturers in Tunisia, Europe and Canada.

Production started in 1974 with the Societe Anonyme d’Entreprises Minires (SAMINE), a subsidiary of Managem. The company has one mine in El Hammam, located about 80km from Meknos, and produces 90,000 tpa concentrate.

The deposit’s capacity is 120,000 tonnes concentrate. In 2008, production of concentrate decreased to 56,724 tonnes from 78,817 tonnes the year before. The company explained this drop as “a result of the construction work which has been done to improve El Hammam site”.

Managem’s main competitor is China which, according to the company, “benchmarks fluorspar prices” on the international market “ owing to its high level of production”.

Other resources

In 2008, the Moroccan Office of Hydrocarbons and Mines (ONHYM) opened a number of high demand industrial minerals deposits to potential buyers and bids for andalusite, magnesite and zircon deposits have been welcomed since then. However, these deposits are still waiting for investors to go into production.

The Sidi Bou Othmane refractory grade andalusite deposit, located 25km north of Marrakech, hosts 8m. tonnes andalusite schists and 1m. tonnes andalusite sands. Lesser quality andalusite has been identified in the remainder of the deposit, with 20m. tonnes indicated (53.5% Al₂O₃, 0.7% Fe₂O₃, 8.1% RP).

Located in north Morocco, the Boudkek magnesite deposit is 80km south-east of Tangiers port. Its potential was assessed at 2m. tonnes magnesite at 42% MgO, 800,000 tonnes 44% MgO with a cutting grade of 39% MgO. The Boudkek deposit was selected for development owing to its ease of access, and work to date includes detailed mapping, laboratory studies, trenches, reconnaissance shafts, core drilling and testing.

In south Morocco, the Bouissaffen zircon ore deposit is located 65km from Guelmim. Site analysis has revealed an estimated resource of 22.32m. tonnes of 0.64% ZrO₂ and 4.4% TiO₂.

Algeria boosts phosphate

“Algeria wants to be a major player in the phosphate rock market,” commented Taib from USGS. “Both Morocco and Tunisia are already established as world top producers and Algeria could compete with Tunisia but not with Morocco, at least in production volume,” he added.

Algeria produced 1.8m. phosphate rock in 2008, the only producer being the SociŽtŽ des Mines de Phosphate (SOMIPHOS), a subsidiary of Ferphos Group SpA.

According to the USGS, mining output of phosphate increased by more than 100% since 2004 and by 19% to 1.8m. in 2007. “It came as part of the government policy to promote mining, especially since Algeria is between two major phosphate rock producers, namely Tunisia and Morocco and because of the availability of large reserves (according to government officials),” explained Taib to IM.

The country has phosphate reserves of about 2,000m. tonnes, located in the basin of Djebel Onk in Tebessa province, which are all exploitable as open pit. But according to the Algerian ministry of mines, these resources are a small part of the basin’s potential and as Imphos explained to IM, they are difficult to exploit because of the quality of the material, which has a low content in P₂O₅.

That does not stop foreign investors searching for new sources of the fertiliser mineral such as Engro Corp. Ltd formerly Engro Chemical Pakistan Ltd which revealed to IM that it plans to invest $1,000m. in a new phosphate fertiliser plant in North Africa this year.

Even though the chemical and fertiliser company did not confirm in which country, it explained that it has plans in Algeria, in addition to be “working on other options in phosphate rich countries”. These areÊunderstood to include Morocco and Tunisia.

“We are working on various options in key North African countries with phosphate rock deposits. Some of these options are being pursued along with other international companies and are at different stages of maturity,” said Khalid Siraj Subhani, chief executive officer designate at Engro. He added that none of the projects have been finalised.

Engro’s main local partner in Algeria is phosphate producer Ferphos, but the company is “similarly working with other [neighbouring] partners in other countries”.

Engro hopes to start production between 2013 and 2015, targeting an output in the range of 1-2m. tpa of diammonium phosphate (DAP).

Engro’s move is part of the demerger and transfer of the company to expand its fertiliser business into a separate wholly-owned subsidiary, named Engro Fertilizers Ltd.

Although the company was focusing on North Africa, Subahni said “other attractive locations can also be evaluated in future”.

However, Algeria will have to upgrade its phosphate rock shipping designated for export and using stable railway instead of trucking.

SOMIPHOS has also revealed to IM that it plans a “big project for phosphate fertilisers and phosphoric acid” in the east of the country which should be effective at the end of 2010 or the beginning of 2011. At time of press, the company could not be more specific.

Algeria at a glance

President: Abdelaziz Bouteflika

Capital: Algiers

Population: 35.5m.

GDP growth: 4.6%

GDP: $182,000m.

Industries: helium (world 2nd producer), oil (2^nd African producer, 1% of world reserves), natural gas (2.8% of world reserves)

IM: phosphate, cement, clay, gypsum, barytes, bentonite, limestone, kaolin

Barytes and kaolin

The Societe des Mines de Baryte d’Algerie (SOMIBAR) is the national leader in the production of barytes, producing more than 55,000 tpa mainly for the oil industry.

The company, a subsidiary of ENOF, owns a barytes deposit in Draissa, located 300km south west of the city of Bechar. It has resources of 6.5m. tonnes. The capacity is 100,000 tpa and SOMIBAR plans to increase production within the next few years in order to meet the market demand.

SOMIBAR also produces dolomite and barytes in A•n Mimoun, near the city of Tamza, located about 208km from the port of Skikda. The operation has a capacity of 40,000 tpa barytes.

The Societr des Kaolins d’Algerie (SOALKA) SpA, another subsidiary of ENOF, is the only kaolin producer in the country but also in North Africa.

The company owns two kaolin deposits located in El Milia and Debbagh, in the provinces of Jijel and Guelma, in addition to a processing plant in El Milia, with a capacity of 50,000 tpa.

SOALKA produces three grades of kaolin: the two first for ceramics and the third one for refractories. The kaolin is used for the domestic market, mainly for ceramics which depends on the construction market, severely impacted by the global downturn last year.

But the company remains positive as the market started again to improve since the beginning of 2010, thanks to a project of 1m. houses to be built between by 2013 launched by the government. Therefore, the company has planned “to increase capacity, and to diversify quality” as Farid Bourbia, director of development at SOALKA, told IM. “We want to increase our panel of products in order to expand our market,” he added.

The company reports prices for its kaolin ranging between DZD 6,000-9,000($82-123)/tonne for ceramics and refractory grades, and DZD10,500-12,500($144-171)/tonne for paper coating grade.

Tunisia

Tunisia is the world’s fifth ranked producer of phosphate rock and accounted for 5.2% of the world supply of phosphate rock in 2007, producing about 8m. tpa. It is Africa’s second largest producer after Morocco.

Phosphate production in Tunisia is controlled and operated by state-owned Compagnie des Phosphates de Gafsa (CPG), which has nine operating open cast and underground operations in the Gafsa region and has been mining phosphate for almost a century.

More than 90% of the phosphate rocks are currently mined from Gafsa. The Tunisian phosphate is then processed into trisodium phosphate (TSP), diammonium phosphate (DAP), nitrate fertiliser and phosphoric acid by its subsidiary Groupe Chimique Tunisien (GCT).

Tunisia’s second largest phosphate deposit after the Gafsa deposit is Sra Ouartane, located in the southern part of the Tunis basin, and operated by CPG. According to the Tunisian Ministry of Industry, Energy and Small and Medium Entreprises, the Sra Ouertane mine has estimated reserves of 1,000m. tonnes of phosphate ore, with a minimum of 50 years mine life.

The Sra Ouartane deposit is being eyed by the Indian mining company National Mineral Development Company (NMDC), which announced that it intends to bid for a new phosphate operation in the north-west deposit.

NMDC’s chief executive officer Rana Som explained that, as part of a consortium led by Rashtriya Chemicals and Fertilisers (RCF), NMDC is sending a team to Tunisia to inspect the rock phosphate mine.

That will come as good news for the Tunisian government, which is looking for investors to exploit its Sra Ouertane phosphate deposit.

A source from Groupe Chimique Tunisien (GCT) Ð the government-owned company which processes the Tunisian phosphate ore produced by subsidiary Compagnie des Phosphates de Gafsa (CPG) told IM that China National Chemical Engineering Co. (CNCEC) also made an offer to exploit the phosphate rock mine which is located 220km from Tunis.

According to the same source, Vale SA is also showing interest in the Sra Ouertane deposit (IM 10 August 2009: Vale eyes Tunisian phosphate) but the Brazilian company did not want to comment.

The deal with the chosen investor would be to produce 4-5m. tpa of concentrated phosphate and to transform the phosphate produced into several forms of fertilisers by implementing a chemical complex of 1m. tpa of phosphate, under forms of Merchant Grade Acid (MGA), monoammonium phosphate (MAP), DAP or TSP.

Tunisia at a glance

President: Zine El Abidine Ben Ali

Capital: Tunis

Population: 10.5m.

GDP growth: 5.1%

GDP: $40.8m.

Industries: Petroleum (11^th African producers)

IM: phosphate (5^th), cement, fluorspar

Other minerals

According to the USGS, in 2007 the country also produced industrial minerals such as lime (395,000 tonnes ); clays (5m. tonnes) mainly for the construction market; gypsum (157,000 tonnes) and cement.

The country also produces fluorspar as the improvement in world fluorspar prices prompted an interest in the past-producing fluorspar mines and fluorspar deposits in Tunisia. According to the USGS, mine production of aluminium fluoride increased by 8% in 2007 to about 46,000 tonnes.

Egypt

Egypt’s natural resources include natural gas and petroleum, and therefore a production of about 4m. tonnes sulphur as a by-product of the oil industry. But apart from the cement sector, which is one of the most flourishing in North Africa, the country is working on using its phosphate assets. “Egypt of course has an advantage because of its location and the size of its industrial minerals market, it was able to attract foreign investments for a large nitrogen and phosphate fertiliser project because of the availability of cheap natural gas,” Taib from USGS explained to IM.

But the mining conditions, including for phosphate, are still challenging owing to the surrounding desert, the lack of water and the fact that the deposit is far from the sea compared to the Moroccan, Tunisian and Algerian deposits which are located closed to the Mediterranean Sea. “Having a good deposit is not enough, you need to have good geographical conditions,” commented Imphos.

However, the country increased its phosphate production to 3.2m. in 2008, up from 2.5m. the previous year.

Egypt at a glance

President: Hosni Mubarack

Capital: Cairo

Population: 84.8m.

GDP growth: 4.5%

GDP: $212,000m.

Industries: Natural gas, petroleum, iron

IM: phosphate, cement, construction materials, granite, gypsum, limestone, raw materials for glass

Mauritania, Libya & Sudan

Mauritania, Libya and Sudan are the only North African countries which do not own or produce phosphate. However, the three countries are developing their cement industries to meet the increasing demand for construction material. They are also producers of gypsum, lime and kaolin (see table p.57and map).

However, political instability can remain an issue to improve the industrial minerals sector. Mauritania, for example, “has to overcome the challenge of political instability first. Industrial minerals production in Mauritania can pick up once main metal mining like gold, iron ore or uranium is solidified and adequately funded by foreign investor,” commented MostafaTaib.

In Western Sahara, the only production is phosphate, which is managed by a subsidiary of Morocco’s OCP. The total output was about 2m. in 2008. However, mining phosphate in the area remains challenging owing to the desert climate and the lack of water.

Libya at a glance

President: Muammar Qaddafi

Capital: Tripoli

Population: 6.5m.

GDP growth: 5.1%

GDP: $55,000m.

Industries: oil (3.6% world reserves, owns largest African reserves, 3^rd among African producers)

IM: cement, gypsum, lime

Outlook: the Sub-Saharan factor

North Africa seems to have bright days ahead for its two main assets: the phosphate and cement industries.

Firstly, as explained above, an increase in production of cement and other minerals needed for residential, commercial and industrial sector, is expected by 2020 in parallel to more foreign investment in these countries “especially if government regulations were loosened”.

Algeria and Egypt are the North African countries seen as the ones with the most opportunities, cement, construction material, phosphate rock, and phosphate fertiliser being the most promising minerals “because of the abundance natural gas resources which can be used for energy and as a component in fertiliser production,” believes USGS’ Taib. “Any industrial mineral that can be used in the petroleum industry or building sector is expected to have potential in the near future,” he added.

Then, world demand for phosphate is expected to grow at a healthy rate of 2% per year, owing to the increase of population worldwide followed by a growing need for fertilisers.

Being mainly an exporter of phosphate, North Africa’s main weakness stands in the fact that it therefore depends on world demand, contrary to the USA and China which predominantly consume their product domestically. “There are great resources in North Africa but it all depends on the international market”, warned Imphos.

“Demand is expected to grow until 2030,” Patrick Heffer from IFA, explained to IM. While demand will decrease in Europe and China, being stable in North America, the boost is expected to come from India and Brazil, but also, more surprisingly, from Sub-Saharan Africa as the region will develop its agriculture and biofuels within the next decade.

“In Sub-Saharan Africa, the situation is a bit similar that of Brazil. The soil in Sub-Saharan Africa is phosphate deficient and therefore has a huge need in phosphate,” underlined Heffer, adding: “Growth from Africa will befaster than in the rest of the world.”

However, the balance in the phosphate routes may change within the next two years when Saudi Arabia start its new phosphate production. The Saudi Arabian Mining Co. (Ma’aden), the country’s first phosphate producer, is targeting 12m. tonnes phosphate rock output from H1 2011 in addition to 200,000 tpa phosphoric acid by 2012 (IM June 2009: Seeking Saudi mineral potential).

As a result, with Saudi Arabia geographically facing of India and Pakistan, it could become quite tempting for these two major phosphate consumers to use the nearer Saudi phosphate instead of North African sources.


North Africa’s main industrial minerals producers

Source: USGS, IFA, Ministry of Mines Morocco

North Africa’s top cement producers

Source: USGS