P for plunder morocco’s exports of phosphates from occupied Western Sahara, 2012 & 2013
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P FOR PLUNDER Morocco’s exports of phosphates from occupied Western Sahara, 2012 & 2013 Fertilizer companies from a dozen countries import controversial phosphate rock from Western Sahara, under illegal Moroccan occupation. This report shows which. WSRW REPORT — JUNE 2014 PUBLISHED: MELBOURNE, AUSTRALIA, 12 JUNE 2014 Published with generous financial support from The Norwegian Confederation of Trade Unions (LO) PHOTOS: BERSERK PRODUCTIONS (P.1), WSRW.ORG (P.2, 3, 19, 20, 27, 28), ROBIN MAINDONALD (P.18A), RICK VOICE (P.18B), JOHN TORDAI (P.25) FRONT PAGE: World’s longest conveyor belt transports phosphate rock from Bou Craa mines to the coast. ISBN:
978-82-999672-0-4 DESIGN:
LARS HØIE The report can be freely reused, in print or online. For comments or questions on this report contact coordinator@wsrw.org Western Sahara Resource Watch (WSRW) is an international organisation based in Brussels. WSRW is working in solidarity with the people of Western Sahara, researching and campaigning against Morocco’s resource plundering of Western Sahara. www.wsrw.org www.twitter.com/wsrw www.facebook.com/wsrw.org To strengthen our research and intensify our international campaigns WSRW need your help. Find WSRW payment details on www.wsrw.org. Former phosphate workers protesting in occupied Western Sahara, 2010. LIST OF ABBREVIATIONS: DWT
Mt Metric tonnes OCP Office Chérifien des Phosphates SA UN United Nations US $ United S All life on the planet, and so all agricultural production, depends on phosphorus, P. That element is found in phosphate rock and turned into fertilizers. For the people of Western Sahara, their P does not grow into benefits. Rather the contrary. For the first time, Western Sahara Resource Watch now publishes a detailed overview of the companies involved in the purchases of the phosphates from occupied Western Sahara. The phosphate rock is illegally exploited by the Moroccan government in Western Sahara, a territory that it is brutally occupying. The exports are Morocco’s main source of income from the occupied territories. Representatives of the Saha- rawis have been consistently outspoken against the trade, both in the UN, generally and to specific companies. The list we present in this report is complete for the calendar years of 2012 and 2013 to the best of our knowledge, naming nearly all the shipments of the phosphates from occu- pied Western Sahara. This report attributes the purchases of Morocco’s production in Western Sahara in 2013 to ten named and two unknown importers in ten countries internationally. The two companies PotashCorp (US) and Lifosa (Lithuania), alone, accounted for 50% percent of all purchases. The report details a total exported volume from Western Sahara in 2013 at 2,2 million tonnes, with an estimated value of $330 million, shipped in 48 bulk vessels. That is an increase of 400,000 tonnes from 2012, the report shows. Of the ten named companies identified as importing phos- phates in 2013, six are listed on international stock exchanges or are majority owned by enterprises which are listed. Four of those have been subject to blacklistings by ethically concerned investors due to this trade on grounds of human rights or international law. The Canadian company Agrium started its imports only in September 2013, and has thus yet not been subject to known investor exclusions. Of the remaining four companies not registered on any stock exchange, two are farmer owned cooperatives in New Zealand, while the two remaining are fully or partially owned by the Government of Venezuela. In addition to naming the involved companes in a “red list”, this report also identifies potential buyers in a yellow “obser- vation list”, as well as a “green list” of companies previously associated with such trade, but which no longer purchase. WSRW calls on all companies involved in the trade immediately halt all purchases of Western Sahara phosphates until a solution to the conflict has been found. Investors are requested to engage, or divest unless action is taken. EXECUTIVE SUMMARY 3 Morocco’s claim to sovereignty over Western Sahara is not rec- ognised by any state, nor by the UN. Its claims were rejected by the International Court of Justice. 1 The UN Legal Office has analysed the legality of the petroleum exploration and exploitation in Western Sahara, a resource extraction activity – one now in its exploration stages – that is of a similar nature. The UN concluded that “if further exploration and exploitation activities were to proceed in disregard of the interests and wishes of the people of Western Sahara, they would be in violation of the international law principles applicable to mineral resource activities in Non-Self-Governing Territories.” 2 Yet, only weeks after the 1975 invasion of the territory, the phosphorus of the Bou Craa mine in Western Sahara was being exported to fertilizer companies in North America, Latin America, Europe and Australasia. The Bou Craa mine is managed by the Office Chérifien des Phosphates SA (OCP), Morocco’s national phosphate company and is today Morocco’s biggest source of income in Western Sahara. Phosphates de Boucraa S.A. (Phosboucraa) is a fully owned subsidiary of OCP. Its main activities are the extraction, beneficiation, transportation and marketing of phosphate ore of the Bou Craa mine, as well as the port and treatment plant located on the Atlantic coast, at El Aaiun. OCP claims that the Bou Craa mines represent 1.6% of the phosphate reserves exploited by Morocco. 3
OCP claims that Phosboucraa is the largest private employer in the area, with over 2100 employees – more than half of those are said to be locally recruited. It also claims that Phosboucraa is a major provider of economic viability and well-being of the region’s inhabitants. OCP equally boasts the social impact of Phosboucraa, in terms of providing pensions to retirees, medical and social advantages to employees, retirees and their families, etc. 4 Upon making these claims, several of the importers mentioned in this report, as well as OCP, refer to confidential analyses made by the law firms Covington & Burling and DLA Piper, as well as to an audit report by KPMG. WSRW has asked the importers, as well as Covington & Burling and OCP for cop- ies of these assessments, but the requests have been rejected or not answered. 5 Saharawis have asked OCP for these reports regarding how they benefit according to these reports, but the requests are not answered. OCP has even proceeded to demand that Youtube block a video in which a Saharawi asks for the opinion from their law firm. 6 Representatives of the Saharawi people object to the trade. The secrecy surrounding the OCP reports makes them impossible to verify. All suggest that Saharawis have not been consulted in the making of the terms of reference for such reports. THE CONTROVERSY 4 “Western Sahara has been under Moroccan occupation since 1975 and is on the United Nations’ list of non-self-governing territories that should be decolonised. The UN’s legal counsel stated in January 2002 that exploration of mineral resources in Western Sahara without local consent would be in breach of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.” Swedish government pension fund, AP-Fonden, upon exclusion of PotashCorp and Incitec Pivot from its portfolios. 7
“[The company] imports natural resources which are extracted in conflict with human rights norms.”
The largest bank in Denmark, Danske Bank, upon divesting from PotashCorp, Wesfarmers, FMC Corp and Incitec Pivot, 2009. 8
“The company is thus indirectly funding Morocco’s illegal occupation of the territory. In an opinion, issued in 2002, by the UN Under-Secretary General for Legal Affairs, the exploitation of natural resources in colonized territories, Western Sahara in particular, was declared illegal if it is not to the benefit of the people of the territory.”
Norwegian insurance company KLP regarding its divestments from Wesfarmers, Incitec Pivot, PCS and FMC Corp, 2010. 9
resources, these will be lost to the exiled local population, even if the territory’s status at some time in the future should change and the exiled local population is able to return. The view of the Council on Ethics is therefore that OCP’s activities in Western Sahara must be considered grossly unethical.” The Ethical Council of the Norwegian sovereign wealth fund, 15 November 2010, explaining the $ 350 US million divestment from PotashCorp and FMC Corp. 10
THE SHIPMENTS LYTTELTON DUNEDIN BLUFF
NAPIER TAURANGA
GEELONG PORTLAND
TUTICORIN KLAIPEDA
MONTEVIDEO PUERTO
CABELLO VANCOUVER COATZACOALCOS POINT
COMFORT ?
ROUGE BARANQUILLA In 2013, 2.2 million tonnes of phosphate rock was transported out of Western Sahara. WSRW has traced its route. 6 LYTTELTON DUNEDIN
BLUFF NAPIER
TAURANGA GEELONG
PORTLAND TUTICORIN KLAIPEDA MONTEVIDEO PUERTO CABELLO
VANCOUVER COATZACOALCOS POINT COMFORT
? BATON ROUGE BARANQUILLA 7 THE MOROCCAN TAKE-OVER OF BOU CRAA MINE 1947: Western Sahara’s phosphate reserves are discovered 130 kilometres southeast of El Aaiun in a place called Bou Craa. The discovery of phosphate reserves is the first potential source of mineral revenues for the colonial power Spain. 11
The Empresa Nacional Minera del Sahara is founded in order to operate the mines, which are owned by a Spanish public industrial sector company.
The company is renamed Fosfatos de Bucraa, S.A., also known as Fos Bucraa.
The Spaniards start to operate the mines. Many Spaniards find employment in the mines, as did the Saharawis; the native population of the Spanish Sahara, as the territory is known at the time.
A UN mission that was sent to Spanish Sahara in view of an expected referendum predicts that Western Sahara could very well become the world’s second largest exporter of phosphates, after Morocco.
Mounting international pressure to decolonise force Spain to come up with a withdrawal strategy from Spanish Sahara. Maintaining a claim on the phosphate deposits was a key consideration for the colonial power. Failing to decolonise Western Sahara properly, by allowing the people of the territory to exercise their right to self-determination, Spain strikes a deal with Morocco: through the Madrid Accords. Spain illegally transfers the administration over the territory onto Morocco and Mauritania, while retaining a 35% share of the Bou Craa mines. No state in the world, the UN, nor the people of Western Sahara, recognised the transfer of authority from Spain to the two states. Mauritania withdrew in 1979, admitting it had been wrong. Simultaneously, recouping his authority after two failed coups d’état, Morocco’s King Hassan II orders the Moroccan army to invade Western Sahara. The King may have hoped that this would give Morocco as much leverage to determine world phosphate prices as OPEC has over oil prices. 12
1 January 1976: The Madrid Accords come into effect and after a transition period of 16 months OCP would take over the management of the mines. 13
Spain sells its 35% ownership of Bou Craa. 2014: Morocco continues to operate the mine in occupied Western Sahara. CITY
Refugee camps CAPITAL
Morocco’s military ‘berm’ WESTERN
SAHARA Morocco
The Canary Islands Bou Craa conveyor belt
LARGE EXPORT Extraction from Bou Craa is according to OCP between 2,5 to 3 million m³ a year, while stock is estimated at 1,1 billion m³. 14
According to WSRW’s findings, the extraction was 1,8 million tonnes in 2012, and 2,2 million tonnes in 2013. Until 2006 export of phosphate rock averaged 1.1 million tonnes annually, considerably less than a production capacity of 3.0 million tonnes. In the late 1970s, production stopped for three years during armed conflict in the territory, only gradually achieving 2.0 million tonnes by the late 1990s. From 2009 through 2013 production and export has averaged 2.3 to 2.5 million tonnes annually. Bou Craa today contributes around 10% of OCP’s total sales of phosphate rock.
An investment and development program worth 2,45 billion US $ has been developed by OCP for the period 2012-2030. In that timeframe, the program will aim to modernize the Bou Craa mine, develop deeper phosphate layers, create higher add- ed-value products for exports, increase the El Aaiun harbour capacity for phosphate activities and expand the social and sustainable development projects in the Bou Craa area. 15
program, industrial development investments are planned, such as mining investments (worth around 250 million US $) that will include the building of a flotation/washing unit and upgrading of extraction equipment; new infrastructure to extract lower phosphate layers. 16
PEAK P Phosphate is a vital component of the fertilisers on which much of the global food production and food security depends. For some time there has been concern about the world population’s reliance on a finite supply of phosphorus, and the implications of this for agricultural productivity, food prices and nutrition, particularly in developing countries. The term “peak phosphorus” has joined the concept of “peak oil” in the lexicon of 21st century scarcity. There are no substitutes for phospho- rus in agriculture. 17
world’s biggest phosphate reserves and is the third largest producer of phosphates in the world. 18
fertilizers was a contributing factor in the oddly flucutating market prices of rock since 2008. As global food demand and food prices have increased, there has been an added demand for phosphate. This price trend remained constant from 2011 through early 2013 before declining steadily from a start-of- year $180/tonne to $105/tonne at year-end. In this report, the average price of phosphate in 2013 is calculated at $150/tonne. The average price in 2012 is calculated at $185/tonne. 450 400
350 300
250 200
150 100
50 0 Jan-06 US $/tonne Jul-06
Jan-07 Jul-07
Jan-08 Jul-08
Jan-09 Jul-09
Jan-10 Jul-10
Jan-11 World phosphate prices kept stale around 50 dollars/tonne for decades until 2007, when it skyrocketed. By 2013, the value is around 150 dollars/tonne. (Source: Global Phosphorus Research Initiative, www.phosphorusfutures.net ) Phosphate rock commodity price 9 THE EXPORTS 2012-2013 2012 2013 Exported amount of phosphate 1,800,000 tonnes 2,200,000 tonnes Value of exported phosphate $340 million $330 million Estimated cost of production $80 million $80 million Estimated revenue to OCP $260 million $250 million Value of largest single shipment from the territory $14 million $12 million Value of smallest single shipment from the territory $2.8 million $1.5 million Number of ships that departed with phosphate from the territory 47 48
38,300 tonnes 46,000 tonnes Average value of phosphate exported in each ship $7.2 million $6.9 million Average annual phosphate price of Bou Craa rock used in calculation in this report $185
$150 METHODOLOGY This report is made from data gathered through continuous vessel tracking. Phosphate prices were obtained from the commercial commodities pricing website “Index Mundi” and checked against other sources. The amounts of phosphate loaded into ships are generally calculated to be 95% of the ship’s overall cargo (and bunker fuel) capacity expressed in deadweight tonnes (DWT). In cases where ships were less than 40,000 DWT the 95% factor was reduced to account for a higher relative amount of fuel and provisions. Ships were tracked and confirmed to have arrived at stated destinations. WSRW believes that is has detected and accounted for all vessels departing from El Aaiun harbour for 2012 and 2013. However, WSRW cannot exclude that some vessels have not been detected. Vessels from 1 October 2011 to 31 December 2011 are also listed in the Appendix.
Imports per importing Country, 2012 – 2013. Figures in metric tonnes. Clients per nationality of (parent) company. Figures in metric tonnes. Value per importing country, 2013. Figures in $ US Value per nationality of (parent) company, 2013. Figures in $ US Venezuel a 147,000
Au stra lia 70 ,00 0 Other 70,000
Canad a 270,00
0 New Zea lan d 320
,000 Russia 400,000
US A 27 0,0 00 Au stra lia 92 ,0 00 Venezuel a 210,000
Other 378,000
Ru ss ia 175
,0 00
298,000
279,000
New Zealand 34 3,000 Ot he r 140
,00 0
stra lia 70 ,0 00 Colombi a 107,000
Canada 170,000
Mexico 270,00
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