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The OCP Group, founded on August 7, 1920 in Morocco is one of the leading exporters of phosphate rock, phosphoric acid and phosphate fertilizers in the world.
The OCP Group has nearly 20,000 employees located mainly in 4 mining sites and two chemical complexes in Morocco, as well as in other international locations. The group has several subsidiaries in and outside of Morocco. In 2015, its turnover amounted to USD 4.575 billion. In Ethiopia, besides providing its fertilizers to the country’s agriculture sector, it is also working on setting up a fertilizer manufacturing plant. Capital spoke to Fayçal Benameur, Managing Director of OCP S.A Commercial Representative Office in Ethiopia.

 

Capital: Tell us about OCP Group’s over-all activities and presence in Ethiopia.

Fayçal Benameur: With 100 years of experience, and as the leading provider of phosphate-a crucial ingredient in fertilizer-OCP Group has unique expertise in harnessing the power of this natural resource to make farming more productive and sustainable.

To customize fertilizer to the specific needs of the soil, climate and crop, and deliver precisely what is needed in terms of nutrient quantity and quality, OCP Group is mapping soil fertility for 14 African countries-including Ethiopia-to develop customized solutions that meet their individual needs.faycal-benameur

Since 2012, OCP has worked in partnership with the Ethiopian Agricultural Transformation Agency (ATA) and the EthioSIS project to help finalize the soil fertility mapping of the country’s soils, and based on these results, we were able to develop fertilizer formulas specific to Ethiopia. In doing so, we are helping farmers grow more food, while using fewer inputs.

For many years, the Government of Ethiopia has purchased fertilizers from OCP through traders. Now, thanks to the opening of a representative office here in Addis Ababa two years ago, we are eligible to participate directly in government tenders, allowing the Government of Ethiopia to purchase fertilizers at historically low prices.

OCP’s next large project will be a USD 3.7 billion joint-venture with the GOE to build a fertilizer plant in Dire Dawa – one of the largest investments in Ethiopia to date.

Capital: Last year OCP and the Ethiopian Ministry of Public Enterprise signed a USD 2.4 billion partnership for the development of a fertilizer plant. Tell us more about that and what stage that project is on currently.

Benameur: Capitalizing on both Ethiopia and Morocco’s natural resources, the world class integrated fertilizer Dire Dawa platform will source the three key nutrients-phosphoric acid, potash and nitrogen-necessary for plant growth in fertilizer.

The Phosphorus will be imported from Morocco in its most concentrated form, which is Phosphoric acid; Potash will be sourced locally from the Danakil region; and Nitrogen from gas deposits in the Ogaden basin.

The Dire Dawa platform will require a total investment of USD 3.7 billion-with USD 2.4 billion needed for the first phase-and will play host to a production capacity of 3.8 MMT per year by 2025 (2.5 MMT for the first phase by 2022).

After validation of the feasibility studies, we are now moving forward on the following: 1) the Environmental and Social Impact Assessment (ESIA); 2) the conceptual design and technology selection; and 3) the Hydrogeological and Geophysical Investigation, drilling and pumping tests, as well as Hydro and Geophysical Studies.

Capital: Realistically speaking, is this project enough to meet the countries demand for fertilizer? What kind of challenges have you faced in the implementation stage of the project?

Benameur: The Dire Dawa platform is product of OCP’s focus on smart fertilization, which has brought our business steadily closer to the farmer over time. We are working to strengthen the entire agricultural ecosystem throughout Africa-working hand in hand with farmers and providing them with all the resources to succeed. interview-2

And this platform is prime example of just that. The Dire Dawa platform will not only make Ethiopia the first country in Africa to be self-sufficient in terms of fertilizer needs, but also position it as a potential exporter to its neighbors.

For any major project of this scale-with multiple internal and external stakeholders-and with a high degree of complexity, it takes time to gather and evaluate each stakeholder’s point of view. Thanks to the vision, courage and collaboration from the highest authorities, we secured investment in a major industrial project and agreement on positive externalities throughout the value chain.

Capital: How do you think this project will transform the agricultural sector in terms of increasing access to fertilizer for the farmer as well as productivity?

Benameur: This project will benefit Ethiopia in three critical areas that will help the country to unlock its agricultural potential by increasing production and productivity:

Advance Ethiopia from a fertilizer importer to a self-sufficient producer and potential exporter of fertilizer, making a huge impact on its trade balance by no longer spending valuable forex reserves on importation bills; move forward in achieving Ethiopia’s agricultural potential through smart fertilization.

It will also work hand in hand with Ethiopian farmers to provide them the right fertilizer at the right time in the right quantity.

Capital: What is the financial structure of the Joint Venture?

Benameur : We aim for a debt/equity ratio of 60/40-the platform’s numerous positive externalities, in terms of socio-economic development, make it very appealing to financial development institutions.

Because the project relies on guaranteed inputs from OCP and the Ethiopian government, and the outputs offtaken by the Ethiopian Agricultural Business Corporation (EABC), with any remaining volumes exported to the international markets, we are very confident that we will achieve the best possible financial outcome.

Capital: What does the ownership of the plant look like and how many people will it employ?

Benameur: The plant will be owned and managed by a Joint Venture Company created between the Ethiopian Government and OCP.

The project will employ one thousand two hundred (1,200) people during the construction phase and five hundred (500) during operations. In addition to direct employment opportunities, the project will include the development of a skills center and bring in a range of high technology knowledge, supporting and transferring technological skills.

We believe the platform will foster a thriving industrial ecosystem, including sub-contractors, maintenance providers, etc.

Capital: Beside the Dire Dawa Fertilizer Platform, what kind of projects have you been part of in Ethiopia?

Benameur: OCP now supplies 100 percent of local farmers’ fertilizer demand for NPS, NPSB and NPSZnB. These formulas are the result of close partnership with NGOs and other partners-the ATA and EthioSIS-to conduct soil testing and recommend fertilizers that are customized to Ethiopian soils. The customized content of the required nutrients makes them more price-competitive than standard grade fertilizers, to the benefit of local farmers.

In addition, we are engaged in different projects to support the transformation of the Ethiopian agriculture sector. Our work in Ethiopia aims to encourage the country’s long-term development and contribute to the achievement of Ethiopia’s GTP II goals.

In addition to our flagship industrial, integrated fertilizer manufacturing plant that will be built near Dire Dawa, we are also working on a number of projects such as;

Fertilizer Blending project: in partnership with the Ministry of Agriculture and Natural Resources, Farmer’s Cooperative Unions and ATA to improve production efficiency of the existing blending units, including: developing new-not only soil specific, but also crop specific-fertilizer formulas in a 200-km area around each blending unit; and developing a strategy with our partners to modernize the whole blending fertilizer value chain.

Second is the support to the Ethiopian Sugarcane Corporation though four major pillars: improving agriculture practice for the cane plantation; providing technical and project management advice for the sugar refinery under development; improving factory operations for the sugar refinery under operations; and using marketing and sales taskforce to enhance the team skills capability in facing the export market

Livestock and Animal Feeds is another sector that we work to support and improve. Enhancing the quality of animal feeds is imperative to developing sub-sectors such as the dairy industry. One of the biggest challenges in the sector here in Ethiopia is the quality of milk.

Due to the low-quality grass that cattle feed on, the milk that local cows are producing does not have sufficient fat for cheese and cream production. Without high-quality grass or feed, the industry will not be able to improve the quality of meat and dairy products. The entire value chain is dependent on this.

OCP is also investing in Horticulture and Floriculture. After conducting various market assessments, we are starting to introduce customized soluble fertilizers for the floriculture and horticulture sectors, and are working closely with commercial farms and input suppliers.

Capital: How do you assess the fertilizer market in this country compared to other African countries you do business in?

Benameur: While there is a potentially large market for fertilizer use in Ethiopia, current rates of consumption and usage are still low. The Abuja declaration in 2006 recommended 50 Kg Nutrient / Ha, yet today’s average consumption in Sub-Saharan Africa does not exceed 13 Kg Nutrient / Ha. Nevertheless, local demand for fertilizer in the last 10-15 years has consistently increased; consumption is expected to triple in the near future according to MoANR’s forecasts.

Capital: And finally, we understand you recently won a bid to supply some of your products. Could you tell us more about that; for what project and budget?

Benameur: OCP supplied 673 KT fertilizers in 2016/2017, which served 100 percent of Ethiopia’s phosphate-based fertilizer demands. Last month, OCP won the tender to supply 700 KT of NPS, NPSZnB and NPSB compound fertilizers for the 2017/18-crop season.

Through these endeavours, OCP has shown its capacity to be the most competitive supplier of fertilizers. The outcomes of the last tender (2016/2017) demonstrate OCP’s unparalleled ability to use the right fertilizer at the right time in the right quantity to significantly increase crop yields and make the most of the resources we have. We are working toward, and edging closer to our vision of sustainable feeding the soil to feed a growing world.