Egypt’s phosphates: a strategic resource being given a boost

Second-largest phosphate reserves

Phosphates are one of Egypt's most significant mineral deposits, with a deposit belt stretching 750km from the Red Sea coast in the east to the Dakhla Oasis in the west. 
Misr Phosphate Company, which is primarily owned by the Egyptian state, is one of the country's largest producers, with an annual capacity of around 5 million MT. 

Granted in 2019 by presidential decree, it holds the concession for one of the world's largest phosphate reserves at the Abu Tartur mine. This spans 220 sq km and is located 50km west of Kharga, the capital of the New Valley Governorate in southwestern Egypt. The company also has licences to operate in key mines in Sebaiya and the Red Sea area—all three host high grades.

Egypt is one of several Arab state phosphate producers. Regional top spot goes to Morocco, which has the world's largest phosphate deposits by far, with Jordan and Saudi Arabia also mining more than Egypt, at 12 million MT and 8.5 million MT respectively, despite Egypt's phosphate reserves (2.8bn MT) being larger than Jordan's (1bn MT) and Saudi Arabia's (1.4bn MT) combined.

In recent years, Misr Phosphate has improved the production and sale of different types of phosphate ore. It is currently developing a phosphoric acid production complex at the heart of the Abu Tartur mine and is the main shareholder in the project with a 25% stake (it is also a key shareholder in EMPHCO). 

Industry challenges

Over the past two years, the international phosphate market has been on a rollercoaster, with sharp fluctuations leading to price increases, most notably due to the Russia- Ukraine war, with Russia a big global phosphate rock and fertiliser exporter. Russia previously exported much of its phosphates to Europe, but since it invaded Ukraine, it has had to find alternative markets in countries such as India and Brazil.

In addition, the global fertiliser market has faced supply chain disruptions, alongside soaring fertiliser prices due to gas shortages, forcing some fertiliser plants in Egypt to halt production. As a result, Egyptian exports dipped in 2023.

Recent problems with the Egyptian gas network's reserves have caused shutdowns in several industries supporting the fertiliser sector, including the chemical industry, leading to a drop in domestic production and exports. This, in turn, has had a negative impact on Egypt's foreign currency reserves, as the country relies on export revenues to stabilise the foreign exchange market. 

The effects were also felt on the Egyptian stock exchange, with the share price of Misr—which had previously been trading at around $4—falling to less than $0.80, resulting in significant losses for investors.

Egypt is working to restore production stability and regulate gas imports, with Israel having been a key supplier. Previously, Egypt imported Israeli gas, liquefied it, and re-exported it to Europe at a lower cost, ensuring the efficiency of its industrial production cycle. But the Gaza war that has been ongoing since October 2023 has limited Egypt's Israeli gas supplies, causing major losses for its companies. 

Contingency planning 

Dr Sherif El-Gabaly, chairman of Abu Zaabal Fertilisers and Chemicals Company, which produces around one million MT of phosphate fertiliser annually, told Al Majalla that the Egyptian government is planning two new phosphate fertiliser projects. His company wants to "utilise phosphate ore to produce value-added products".

El-Gabaly explained that there were three main types of fertiliser: nitrogen-based (urea), phosphate-based, and potash-based, the latter primarily relying on potassium. He said natural gas had no direct connection to phosphate production, adding that the main challenge from gas shortages had been in nitrogen-based fertilisers. 

"The government quickly addressed this crisis by importing natural gas from abroad, ensuring the uninterrupted operation of fertiliser plants," he said, adding that Egypt had secured multiple gas shipment contracts for 2024-25, stabilising gas supplies for fertiliser factories. "Consequently, there are no longer any gas-related obstacles affecting production continuity." 

Production goals

Egypt has been producing phosphate ore since 1947 and is now focused on maximising its value by converting phosphate into fertilisers and final products rather than exporting it as raw material. "This approach enhances value chains and strengthens the phosphate industry," said El-Gabaly, who also heads an industry federation.

The government wants to make the most of its mineral resources and has launched a global tender for phosphate ore exploration. The tender follows a system that includes royalties, taxes, and a free equity stake for the Egyptian Mineral Resources Authority, presenting one of the key challenges in the sector.

Cairo wants to attract more mining investment, with a target of $1bn annually by 2030, according to the Egyptian Ministry of Petroleum and Mineral Resources. The sector currently includes Misr, Abu Zaabal, El Nasr (affiliated with the Armed Forces), the Egyptian Financial and Industrial Company, and Aswan Fertilisers and Chemical Industries.

A new project designed to boost phosphate fertiliser production is a large-scale initiative led by Misr Phosphate Company in collaboration with the Indonesia's Indorama Corporation, with a minimum investment of $500mn. 

Foundation for success

Hussein Abdel-Rahman Abu Saddam, head of the General Union of Farmers and Agricultural Producers, told Al Majalla that Egypt's phosphate reserves were over three billion tonnes, including near the Red Sea, Safaga, Quseer, Qena, Edfu, and Abu Tartur. He added that Egypt was also the largest producer of urea fertiliser in the Arab world, with an annual output of around 7.6 million MT.

This makes the chemical fertiliser industry "one of Egypt's most important strategic industries, given the high economic returns from its exports and its role in developing the agricultural sector," said Abu Saddam, adding that phosphate is important in fertiliser and feed production because it contains phosphorus and oxygen, which are essential for animal growth. 

Manufacturing fertiliser and processing phosphate ensures the optimal utilisation of natural resources to achieve long-term economic benefits while increasing the added value of local raw materials. This helps meet domestic market needs while expanding exports, particularly given the rising demand for these products.