China's Sinochem will immediately raise the volume of its fertiliser imports from Moroccan state-run phosphate producer OCP under a deal that could also pave the way to joint investments, officials said. Under the agreement signed on Monday, OCP will more than triple volume sales of diammonium phosphates (DAP) to the Chinese company starting in 2011 to 500,000 tonnes a year, Moroccan Foreign Trade Minister Abdellatif Mazouz said.
"This agreement covers the 2011-2014 period. The maximum amount of fertilizers OCP had sold on an annual basis to Sinochem was 150,000 tonnes," Mazouz told Reuters.

Growing protein consumption in Asia and a surge in global food prices is encouraging farmers to invest in fertiliser, agrochemicals and farming machinery to increase yields, Baring Global Agriculture Fund said last week. This trend is also encouraging chemical companies to secure supplies of phosphates and pushing up prices. Morocco, the only North African country that has no oil or gas of its own, sits on nearly half of global phosphate reserves, including deposits in the disputed Western Sahara, and accounts for around a third of global phosphate exports. The deal, replacing an existing agreement between the two firms, was signed on the sidelines of a visit to Morocco by Chinese Commerce Minister Chen Deming.

The agreement "reconfirms and prolongs a relationship that has been going for 16 years", the head of Sinochem's fertilizer import department said.  "Before we have been buying between 50,000 tonnes and 100,000 tonnes of DAP from OCP," the Chinese executive said.  Mazouz also said the OCP-Sinochem agreement would pave the way for joint investment by the two firms. He did not elaborate. Exports of phosphate and its by-products generated 35.6 billion dirhams ($4.3 billion) in 2010 against 18.1 billion dirhams the year before, generating alone more than half the net increase in the country's exports last year.

Official data shows that in 2010 OCP raised the volume of its natural and chemical fertiliser exports by 52 percent to 3.47 million tonnes, while the average price per tonne rose 53 percent to 3,762 dirham, which is almost 50 percent below the 7,273 dirham peak recorded in 2008.  For phosphoric acid, the volume of OCP's exports rose 23 percent to 2.34 million tonnes while the average price rose 37.4 percent to 5,794 dirhams, also below a 2008 peak of 14,0013 dirhams.