Canadians main buyers of phosphate in disputed Sahara zone

Two Canadian fertilizer firms have become the dominant buyers of phosphate rock from the disputed territory of Western Sahara after other companies stopped the practice, according to a report.

The study, released Friday by Western Sahara Resource Watch (WSRW), found that Potash Corp. of Saskatchewan Inc. and Agrium Inc. shipped a combined 916,000 tonnes of phosphate from the territory last year. That accounted for 64.5 per cent of all purchases from Western Sahara in 2015. Potash Corp. shipped 474,000 tonnes and Agrium shipped 442,000, the report said.

“Agrium and Potash Corp. are by far the biggest importers,” Erik Hagen, a WSRW board member, said in an interview.

These shipments are controversial because of Western Sahara’s unique status. It is the last remaining colony in Africa, but is under the de facto control of Morocco, which claimed sovereignty over the area after Spain withdrew in 1975.

Western Sahara’s Phosboucraa mine, which is the source of the phosphate exports, is managed by Morocco’s national phosphate company and is Morocco’s biggest source of income from the disputed territory.

Hagen said the people of Western Sahara should have the authority to decide what to do with the phosphate, rather than a neighbouring government. His organization believes the mine is being “illegally exploited” by Morocco and thinks foreign companies should stop purchasing phosphate from it.

“Morocco’s claim to Western Sahara is not recognized by any state, nor by the (United Nations),” WSRW noted in its report.

Other large fertilizer companies, including Mosaic Co. and Yara International ASA, have halted their purchases from Western Sahara in recent years due to concerns in the international community and among investors regarding the dispute.

Overall exports from Phosboucraa dropped 33 per cent in 2015 compared with 2014, according to the report. Hagen said the drop was due to operating challenges at the mine and port, in addition to importers’ buying less rock.

As rival companies have reduced or stopped their imports, the relative share of product being bought by Potash Corp. and Agrium has increased. They accounted for 64.5 per cent of overall Western Saharan purchases in 2015, compared with about 47 per cent in 2014, according to the report.

“The Canadian near-monopoly on this trade will increase even more in 2016,” Hagen said. He suggested that one reason Potash Corp. and Agrium have continued to buy from Western Sahara is that there isn’t much awareness of the territorial dispute in Canada, and investors are not focused on it.

Last November, Saskatoonbased Potash Corp. published a detailed note on Western Sahara. The company said it imports the Phosboucraa ore for its facility in Louisiana because a long-term customer requires a “very specific” type of phosphate rock to meet its needs.

Western Saharan shipments to Louisiana have been going on for decades, and Potash Corp. said it has done nothing wrong.

“Neither the (United Nations) nor any other competent legal authority has concluded that the production and use of phosphate rock from Western Sahara is in violation of international law,” the company said in a note.

Calgary-based Agrium began importing from Western Sahara in 2013. The company had a mine in Kapuskasing, Ont., that reached the end of its life, so it needed to find a new source of phosphate to feed its Redwater processing plant in Alberta.

In a letter to WSRW last February, Agrium said it hopes for a “mutually acceptable political solution” to the dispute.