Mosaic Consolidates in North America, Phosphate Industry Focus Shifts to the MENA Region

LONDON, October 29, 2013 /PRNewswire/ --

Industry investment and influence migrate to the MENA region, while consolidation occurs in North America with Mosaic acquiring CF Industries' phosphates business

The largest North American phosphates producer Mosaic has announced it will acquire CF Industries' phosphates assets bringing consolidation to the US industry. Meanwhile, Morocco and Saudi Arabia have taken centre stage in what appears to be a fundamental shift in influence for the phosphate industry over the next decade to the Middle East and North Africa.

"The bulk of the investment into phosphate rock, phosphoric acid and processed phosphates will occur in Morocco, Tunisia, Jordan and Saudi Arabia, as access to low-cost raw materials and proximity to growth markets favour these export-oriented producing countries, as analysed in our Phosphate Cost and Profit Margin Service," Integer's Lead Phosphate Analyst, Monica Baker, explains. "While most of the investment occurred in China over the first decade of the 2000s, now the focus has shifted to other areas of the world, which have a more obvious competitive advantage as exporters," Baker adds.

A further sign that North America's influence on the phosphate market is declining, albeit slowly, is the breakup of PhosChem earlier in the month of October 2013. US phosphate producers Mosaic and PotashCorp announced they were going their separate ways, serving export markets from their own channels. PhosChem was believed to hold around 10% of global processed phosphate trade.

The PhosChem announcement also fits with the latest development in the US phosphate industry, with Mosaic announcing it is to take over CF Industries' phosphate business for US$ 1.2 billion in H1 2014. The deal comes with a strategic 15-year ammonia supply contract between the two companies which means Mosaic will forego its Faustina, LA ammonia plans. The acquisition is subject to customary regulatory approvals.

Mosaic also entered a joint venture with Saudi Arabia's Ma'aden earlier in 2013, investing US$1 billion and taking a 25% stake in the second phase of development of the phosphate industry in Saudi Arabia, further highlighting the importance of proximity to key markets and of access to competitively priced raw materials - not only phosphate rock, but also ammonia and sulphur which are key inputs for processing. Ma'aden will add 1.5 million tonnes of P₂O₅ to its current phosphate activities in cooperation with Mosaic and SABIC by 2016.

Investment plans continue to progress in Morocco, as Office Chérifien des Phosphates (OCP) plans on doubling its phosphate rock processing capacity by 2020 to 50 million tonnes. The Moroccan major is also adding four new DAP/MAP granulation trains by 2020. Phosphoric acid capacity is also coming on stream in Tunisia and Jordan.

"The fundamentals for the demand side of the phosphate business remain robust and Integer forecasts a 2.5% growth rate per annum for phosphate fertilizers to 2023. The near term uncertainties surrounding Indian demand and China's export policy in 2014 are likely to remain influential, but other important markets are likely to show interesting growth such as Brazil, where significant investment is also taking place, and other Asian countries," concludes Baker. "The shift in influence to the MENA region is in line with the key factors influencing the profitability of the phosphate industry."

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Integer Research is a specialist provider of research, data, analysis and consultancy services for the global fertilizer industry. For more information please contact Ali Asaadi on +44(0)20-7503-1265 or ali.asaadi@integer-research.com

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