Low prices are not putting off international investors, who are piling into the phosphates sector in Togo, Guinea-Bissau, Gabon and Senegal, confident of future fertiliser needs. Is renaissance in the air for the phosphate sector?
Multinationals are jockeying for position, seeing potential in the continent’s push for food security and its current low fertiliser use: 4.7kg per resident compared to 200kg in India or China. While phosphate prices have fallen, with good-grade ore costing about $100 per tonne compared to $400 in 2008-2009, investment remains buoyant.
In early September, Togo awarded the huge Kpeme project to extract and process carbonated phosphate to Elenilto, the Israeli group led by Jacob Engen. With one of the largest deposits in sub-Saharan Africa (reserves are estimated at 2bn tonnes), the $1.4bn project will see the construction of a phosphoric acid plant and a fertiliser plant in the next three years.
In the long term, the 30-year concession is expected to yield more than $28bn in revenue, with annual export of 3m tonnes of concentrated phosphate, 500,000 tonnes of phosphoric acid and 1.3 million tonnes of fertiliser products.
And, it is hoped, it will create 1,000 new jobs. It is a phoenix-like moment for an industry that was once a pillar of the Togolese economy, representing 40% of state revenues. Production fell from 3m tonnes in the 1990s to under 1m currently.
While this contract reinforces Elenilto’s stake on the continent, where the company already has oil and mining projects, for its Chinese partner Wengfu this is a first. The state-owned group, a world leader in phosphates and fertilisers, will provide about 40% of the funds for the Kpeme project.
The company is expanding internationally, and Wengfu is seeking further opportunities on the continent. The firm is said to be in discussions with Morocco, Tunisia and Senegal.
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