World’s Largest Phosphate Miner Said Open to Overseas Investors

September 14, 2015 11:00 AM
World’s Largest Phosphate Miner Said Open to Overseas Investors

The world’s largest miner of phosphate, a fertilizer crucial for the health of crops around the globe, is considering foreign shareholders for the first time in almost a century.

OCP SA, 95 percent owned by the Moroccan state, is studying bringing in investors such as sovereign wealth funds as a prelude to an initial public offering within two to three years, said two people familiar with the plans, who asked not to be identified as talks are private.

The company, which retains Rothschild as its financial adviser, has a monopoly on phosphate in Morocco, a country that holds three-quarters of the world’s reserves, according to the U.S. Geological Survey.

OCP Chief Executive Officer Mostafa Terrab said in an interview that the state-owned company is ready to consider all possibilities and a share offering isn’t “taboo,” although the government has the final say.


Red Line



“There is one key red line; the Moroccan state will always maintain majority control,” Terrab said in London on Tuesday. “Other than that, we are open to all financing options that advance our strategy and protect our shareholders’ interest."


The world’s fertilizer industry, long dominated by state companies, has drawn investors and dealmakers since a jump in food prices seven years ago saw phosphate prices increase fourfold between 2007 and 2008.

The deal-making has continued even as prices eased. Potash Corp. of Saskatchewan Inc. had an $8.6 billion offer rejected by K S AG last month. Fertilizer groups this year proposed deals valued at $12.5 billion, data compiled by Bloomberg show. From 2003 to 2009, the average was less than $1.5 billion a year.

While OCP, which took a 10 percent stake in Brazil’s Fertilizantes Heringer SA last year for about $65 million, isn’t "averse" to M&A, it has yet to see a compelling opportunity recently, Terrab said.


$20 Billion Expansion



The company, founded in 1920 is owned 95 percent by the government with the remainder held by local lender Banque Centrale Populaire, is in the middle of a $20 billion-plus expansion program to double mining output and triple fertilizer production. It has spent $4 billion on the 2008-2025 plan so far and is now deploying $2 billion more. The balance will be invested as demand increases, Terrab said.


OCP, which last year saw a 16 percent jump in earnings before interest, taxes, depreciation and amortization to $1.36 billion, raised almost $3 billion from three dollar bonds in 2014 and 2015 and tapped the local bond market in 2011 for about $200 million.

Phosphate is one of three main crop nutrients used by farmers around the world. The other two are nitrogen-based fertilizers, such as urea, and potash. The International Fertilizer Industry Association said in May it expects world demand to grow 1.5 percent to 2 percent annually in the next five years as food consumption rises in emerging markets. Still, low wheat, corn and soybean prices are damping growth, the Paris-based industry body said.

OCP is the largest miner of phosphate rock and the second- biggest producer of phosphate-based fertilizer. Even with a slowing economy in China, it sees "strong growth" in Asia and "tremendous potential" in Africa, Tarreb said.


To contact the reporter on this story: Javier Blas in London at To contact the editors responsible for this story: Will Kennedy at Tony Barrett


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