In May 2009 a petite brunette from Paris wearing black heels scrambled up a pile of mine tailings on the outskirts of the Moroccan town of Khouribga. From up there, Béatrice Montagnier, a hotel specialist with the hospitality consulting firm Horwath, took in the view: parched plains scoured by bulldozers; an old warehouse baking in the sun; a jumble of two-story concrete block homes with a rectangular minaret beyond them. She spun around 360 degrees snapping photos with her pink cell phone and imagining the future: a planned 800-acre resort project that would attract visitors from around the world. How many hotel rooms would they need? she wondered. Should it be three stars or four? And where would the museum be going? There was one issue—project funding—about which Montagnier had no questions. The estimated $1 billion needed to build the resort would come from the ground beneath her feet.
Miners have been working in Khouribga for almost a century, but only now is the area poised to become central to the global economy. Back in the 1920s pioneers started tunneling through the earth here, digging through layers of sediment formed under an ancient sea, looking for phosphate-rich rock and occasionally plucking out the tooth of a 30-million-year-old shark. The phosphate extracted from the rock, used in fertilizer, detergent, food additives, and more recently lithium-ion batteries, sold for decades in its raw state for less than $40 per metric ton. Those days are gone. It's currently trading at about $130.
This is good news for King Mohammed VI, 47, who owns more than half the world's phosphate reserves. James Prokopanko, chief executive officer of Plymouth (Minn.)-based fertilizer giant Mosaic (MOS), has called Morocco the Saudi Arabia of phosphate, with all that implies about the King's power to influence prices and economies. Mohammed's strategy, by most accounts, is to drive the commodity's price higher yet—which means the cost of making everything from corn syrup to iPads will be going up as well.
People following Canadian economic news may have heard that the Canadian government recently defeated an Australian bid to take over Saskatchewan-based Potash Corp, itself a major producer of (along with potash) phosphate.
Phosphate, when used as fertilizer, is the irreplaceable engine powering modern agriculture, and its reserves are in decline almost everywhere except Morocco. Most phosphate mines, including those in the U.S., which produces 17 percent of the global supply, have been in a downward spiral for the last decade, running out of quality rock and hindered by environmental regulation. That has forced companies to look farther afield for additional supplies. Earlier this year, Mosaic spent $385 million for a 35 percent stake in a Peruvian mine to supply rock to its phosphate operations in the U.S. and South America. Meanwhile, Australia's mining giant BHP Billiton (BHP) has been threatening to take over Canada's PotashCorp (POT), a major supplier of both potash and phosphate.
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The scale of Morocco's phosphate wealth was officially verified in September, when the International Fertilizer Development Center released its long-awaited update on global phosphate resources. Morocco's portion went from the 5.7 billion metric tons still cited in U.S. Geologic Survey reports, to 50 billion metric tons—85 percent of the world's total. Even with 170 million metric tons of concentrated phosphate changing hands each year, the Moroccans likely have at least 300 to 400 years of rock available. Talal Zouaoui, OCP's director of communications, won't agree or disagree with estimates, but says in an e-mail that Morocco has "significant reserves," and notes that reserves denote only those quantities that countries have discovered and deem economically viable to extract.
The article examines at length the relationship of phosphates to the Western Sahara issue. Quite apart from Morocco's imperial claims to that territory, the location of so many phosphate reserves on Western Saharan territory creates a disincentive for the Moroccan state to withdraw from that territory, and potential economic incentive for continued Moroccan settlement in that region. The potential impact of so much phosphate wealth on Morocco is also examined; one only hopes that it won't distort the economy overmuch.