Ethiopia has concluded a deal with a Moroccan company to build a giant fertiliser plant as the Horn of Africa nation seeks to secure the supply of fertiliser to the domestic market in order to boost agricultural production.
The agreement was signed by Ethiopian State-owned company Chemical Industries Corporation (CIC) and Morocco’s Office Cherifien des Phosphate (OCP), one of the world’s largest phosphate exporters, and will involve the construction of a $3.7-billion fertiliser plant at Dire Dewa, about 250 km south-east of Addis Ababa, the capital city.
“This South–South partnership is part of a common vision for development and a strong willingness to strengthen economic ties,” says OCP CEO Mostafa Terrab.
He adds that the project aims to take advantage of the natural resources in the two countries – phosphoric acid in Morocco and nitrogen and potash in Ethiopia – that are used in the manufacture of fertiliser.
In terms of the agreement, the megaproject will be implemented in two phases, with the first phase involving the construction of a plant with capacity to produce 2.5-million tons a year at a cost of $2.4-billion. It is projected that this phase will be completed in 2022, making Ethiopia self- sufficient in fertiliser, with potential for export.
Sixty per cent of the financing for Phase 1 will be debt, with the joint venture partners providing the balance in equal measure. During Phase 2, OCP will invest $1.3-billion, increasing the plant’s capacity to 3.8-million tons a year from 2025.
The plant is expected to secure Ethiopia’s fertiliser supply, boosting the agriculture sector, which is crucial to Ethiopia’s economy, considering that agriculture accounted for 45% of the country’s gross domestic product in 2015. The sector also accounts for 80% of the country’s export earnings and 80% of total employment.
The plant will help to increase fertiliser use by farmers, who currently use an average of 45 kg/ha, compared with a world average of 150 kg/ha.
The Horn of Africa nation spends about $150-million each year to import about one-million tons of fertiliser.
The investment in Ethiopia forms part of OCP’s diversification strategy in sub- Saharan Africa as it aims to increase its fertiliser production to 12-million tons this year from seven-million tons in 2014, making it the world’s largest fertiliser manufacturer. The company is also building a plant in Gabon in a joint venture with that country’s government. The plant will produce two- million tons a year from 2018.
OCP is hoping to capitalise on the growth in sub-Saharan Africa’s agriculture sector, which remains the cornerstone of employment and economic growth in many countries in the region. It is estimated that 80% of the arable land in Africa is not exploited.