Booming increase in the phosphate market

Since the initiation of the Abu Tartour phosphate project any Egypt three years ago, no fruitful production or achievement were made as planned, leading to an enormous economic loss and a wide public opposition blaming the government for this failure! However, the current unparalleled alternations dominating the phosphate market worldwide has brought lights of hope

Unprecedented price increase
Since the announcement made by the Chinese authorities, the largest exporter of phosphate worldwide, to partially decrease their exportation level, phosphate prices have been heading to unprecedented price increase for the first time, reaching $360 a ton from only $40. China attributed the reason behind this decision to the country’s industrial development which necessitates large amount of phosphate
As a result of this decision, most of phosphate importers have searched for alternative producers than China to secure their needs. Egypt comes on the list as one of the richest mining places. Since then, the Egyptian authorities have received lot of international requests, which would recover the immense loss and scandal of Abu Tartour Phosphate Project.

Abu Tartour project to be reformed
Last March, the Egyptian Minister of Petroleum Eng. Sameh Fahmy revived once again the old topic of Abu Tartour failure.
The Abu Tartu phosphate project lies in the desert about 50 km west of El Kharga and 650 km south of Cairo. The project consisted of two main production activities; the mine and the beneficiation plant. The Government invited prospective offers for either leasing the mining project and the construction of a chemical/fertilizer complex or leasing the mining project only. The phosphate deposit covered an area of about 1,200 km2, of which a tenth had been explored geologically. Exploration indicated about 715 Mt of estimated reserves with an average seam thickness of 3.5 m. In 2004, the license for exploration was restricted to an area of about 14 km2 with estimated reserves of about 65 Mt of fresh phosphates and about 20 Mt of oxidized phosphates, which could be extracted by open pit mining.
This project, since it was signed in 2005, has not met the expected production level or lured any economic profit as planned, which led to a public protest against the government and the ministry of petroleum.
However, after a long peaceful period of time, the project is back under sport, raising once more the public speculations and concerns. Fahmy announced during a People’s Assembly session that reforms are to be executed in order to revive the Abu Tartour project. In the context of this recovery plan,  infrastructure will be used to produce phosphate and to set up a project for producing phosphoric acid and phosphate fertilizers, thus generating revenues for covering workers’ wages without burdening the State budget. Moreover, new companies will be established to utilize the raw materials in this zone, such as cement and limestone.
The Abu Tartour Phosphate project is a promising project especially after phosphate price increased from $17 per tones in 2004 to $100 this year, said Fahmy in the session.
Fahmy asserted that the Ministry’s main targets are the development program of Abu Tartour Phosphate project, and future production plans to reach the optimum designed capacity of the project and benefit from the infrastructure. The Ministry reported that the Abu Tartour phosphate project has achieved a surplus of LE35 million ($6.36 million) for the first time in 2007. It is expected to double in 2008 and reach about LE70 million ($12.73 million).
At the same time, officials have reported that a study has been done on the situation of investments in the Al Wadi Al Gadid Phosphate projects. Investors are being assessed on their interest in projects to produce phosphoric acid and phosphate fertilizers.

Egypt’s phosphate lures more investments
Serving the Ministry’s plan, many phosphate exportation requests were sealed. In April 2008, India, the largest phosphate consumer worldwide, requested the exportation of Egyptian rock phosphates for use in fertilizer industry in India. The request came during a meeting between the Egyptian Minister of Trade and Industry, Rachid Mohamed Rachid and the Indian Minister for Chemicals and Fertilizers and Steel Shri Ram Vilas Paswan.
Shri Paswan also requested Rachid to export low grade rock phosphate to India which could be used for the manufacture of SSP.
Last May 2008, Egypt’s Orascom Construction Industries (OCI) announced its intentions to invest $800 million in the phosphate fertilizer industry.
“We are investing $800 million in phosphate fertilizers,” Nassef Sawiris, Chief Executive Officer, told Dow Jones Newswires on the sidelines of the World Economic Forum on the Middle East.
“That is a top priority for us now to enter the phosphate fertilizer business,” Sawiris said.
He further added that the location of the investment will depend on the optimum availability of phosphate mines.
“We are going to create some competition between five countries Morocco, Algeria, Tunisia, Egypt and Jordan,” he said.
“The country that is going to give us the best access to phosphate mines will get the plant,” he added.
The Ministry of Petroleum studies the possible phosphate potentials in more locations, among which Al Wadi Al Gadid (The New Valley); officials have reported that a study has been done on the situation of investments in the Al Wadi Al Gadid Phosphate projects. Investors are being assessed on their interest in projects to produce phosphoric acid and phosphate fertilizers.

Although the tremendous changes in the phosphate market worldwide opens new doors for Egypt to flourish this industry, good planning and strategy should be taken into consideration. Some experts argue that the economic profit attained from phosphate exportation is a short-term one! In 10 years from now, the country will run out of this vital raw material, thus it is more profitable to utilize it locally to develop the country’s industrial sector.
Other experts affirm that the economic value of phosphate would be much higher if the phosphoric acid gets extracted from phosphate. As a matter of fact, the economic profit obtained from the exportation of a raw material is much lower than exporting it in a full-product format.
Maybe a new door has been widely opened to flourish the country’s phosphate market, yet right strategies should be made to avoid any future losses.

By: Yomna Bassiouni


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