Morocco’s state-owned mining behemoth OCP, which is one of the world’s largest producers of phosphates and fertilizers, said it would invest USD 7 billion in an ammonia factory utilizing green hydrogen from renewable fuel to enhance productivity and achieve low-carbon targets.
OCP has been one of the largest ammonia importers over the years. In 2022 itself, the state-owned venture spent USD 2 billion on the sourcing of raw ingredients as the conflict in Ukraine drove up worldwide costs.
OCP’s global relevance expanded due to the war’s effects on supply, and its promotion of renewable energy is a key component of a Moroccan industrial plan to decrease energy imports.
OCP said it has an agreement to purchase ammonia from North America this year to help with supply issues.
In the long run, it intends to strengthen its domestic supply chain by constructing a plant in southern Morocco’s Tarfaya.
The plant will start producing 200,000 metric tons of ammonia annually by 2026. It will increase that output to 1 million metric tons by 2027 and 3 million by 2032.
The company’s intention to use hydrogen created by electrolysis driven by solar and wind energy as a raw material to produce ammonia is part of a USD 13 billion strategy it outlined in December 2022 to switch to renewable energy.
Morocco has made significant investments in renewable energy, partly because of its abundance of undeveloped land, exposure to sunlight and wind, and length of coastline, but also because it lacks oil and gas and has a tense relationship with Algeria, a neighbour and producer of hydrocarbons.
The government is pushing for increased desalination to help towns and agriculture deal with the effects of years of drought and plans to grow renewable energy to 52% of installed power capacity from 38% by 2030.
A tendering process to increase the desalination capacity at Safi and Jorf Lasfar on the Atlantic will begin in early 2024, according to state-owned OCP, which has stated its intention to use only desalinated water for industrial operations by 2027.
To serve the industrial facilities, the Tarfaya project calls for a desalination plant that runs on renewable energy and has a 60 million cubic meter annual capacity.
Experts believe that the North African country will likely become a centre for green industrial energy production in the region due to its investment-friendly environment. Morocco, which even in 2022 saw 90% of its energy needs being fulfilled by external sources, is now betting on renewables to strengthen its energy sovereignty, and reduce the cost of energy, which in turn will help the nation to position itself in the carbon-free economy in the coming decades.
According to Abderrahim Ksiri, national coordinator of the Moroccan Coalition for Climate and Sustainable Development and a member of the Moroccan Economic, Social and Environmental Council, Morocco has made a great effort in the field of renewable energies compared to other developing countries.
“In 2009, Ksiri initiated the development of the country’s energy transition strategy. As he explains in the documentary, this strategy was designed to enable Morocco to exploit its unique potential: the country can produce 500 terawatts hours of clean energy every year, between wind energy (350 terawatt hours) with a minimum storage rate of 5000 hours per year, and solar energy (150 terawatt hours) with a minimum storage rate of 2500 terawatts per hour,” noted a report from Carnegie.
“Experts at the Moroccan Economic, Social and Environmental Council believe that the energy transition, with its various components, cannot succeed unless it is accompanied by real industrial integration. In general, when developing and implementing industrial projects, it is necessary to ensure technological ownership and utilize local expertise. To achieve this goal, several scientific research teams at Moroccan universities are seeking to devise ways to produce sustainable, low-cost electricity,” the report stated further.
OCP’s Africa Expansion
OCP had revenues of USD 11.29 billion in 2018, up 40% from 2021, and a net profit of USD 4.9 billion, up 38%, because of increased pricing. Due to lower prices in 2023, profits have decreased, but OCP anticipates a recovery in the second half.
OCP, which has the largest phosphate deposits in the world and intends to boost fertilizer production capacity to 15 million tonnes in 2023 and 20 million metric tons in 2027, stated, “We will ramp up our production to satisfy the incremental demand.”
The company, which has set up blending plants and mapped the soil composition across 30 million hectares to assist in developing customized fertilizers, has committed to allocating 4 million metric tons of fertilizer production to the African market.
OCP’s recent investments in sub-Saharan Africa, where the availability of fertilizer is essential for economic growth, follow other Moroccan businesses’ expansion on the continent, which has supported increasing diplomatic involvement.
OCP will begin fertilizer production in Nigeria in 2026 and it will also begin pre-production at its Ethiopian plant in 2027.