From Boston, Massachusetts, Mostafa Terrab describes how the Office Chérifien du Phosphate (OCP) developed the ability to grow from a rock mining company to a major fertilizer producer.
In an interview given to the Harvard Business School channel for the program “Creating Emerging Markets”, the CEO of the giant OCP, Mostafa Terrab explains how the company, in the space of a few years, went from producing 2-3 to 12 million tons of fertilizer per year.
Responding to Geoffrey Jones’ question on his appointment as head of the OCP Group in 2006, Mostafa Terrab said: “I was appointed because there were question marks – the government was wondering about the situation of the OCP. At the time, OCP was a loss-making company. In fact, it was not a business. It was a parastatal, and the O stood for “office”. But it had experienced a difficult financial situation in previous years, which was not related to the importance of phosphate reserves in Morocco.“.
“The question arose as to why this was so. Knowing that I was a bit of a dare man, or maybe a bit crazy for accepting challenges, they asked me to look into the situation and say if I was willing to try to solve the problem. It’s a challenge they knew I couldn’t refuse“, continues the CEO.
Terrab informs that the main activity of the Group was, at the time, to sell the ore, or what is called the phosphate rock, except that it was not profitable, because the price of phosphate had remained very stable , even in nominal dollars, for 30 years.
“As you can imagine, the costs were not stable. We were in a business where our main product was declining in terms of real dollars. Costs were rising and that’s what led to the company’s annual losses“, he revealed.
This is indeed a strategy that had to be put in place. “We decided that the only solution was to add value to the phosphate rock in the country, by producing various finished products from this rock. The rest is history, as we were able to invest heavily in fertilizer production and get the business out of the woods fairly quickly.says Terrab.
From 2006 to 2015, the OCP hired massively, but they were young, inexperienced people, and decided to set up a massive training system, from executive training to technical training. “We have invested heavily in training, so much so that we have even created a university to have the capacity to train these young people internally“, notes the CEO.
Terrab identifies mindset as a top challenge. “Our main activity has completely changed in a few years, going from a producer and seller of rocks to a producer and seller of fertilizers. If your core business is changing so quickly and so massively, we need to make sure the mindset and culture is different“.
For the CEO of the giant OCP, the mindset and culture of a company whose main activity is plant nutrition are different from those of a mining or purely industrial company. The company, he adds, needed to be closer to the farmer and closer to the agricultural sector.
“We have created what we call a movement. After hiring a few thousand young people – well trained, but inexperienced – we found that they understood our main objective and our strategy very well.“, he advanced.
As for the attention paid by OCP to Africa, the Group is committed to meeting all African demand when needed, a commitment that has involved targeted donations of personalized fertilizers in around twenty countries. , but also a strategic and beneficial vision for the continent.
“With regard to fertilizers, we looked at the matter from the same angle and said that the opportunity was not to bring standard fertilizers to Africa, but to manufacture fertilizers adapted to the plant and the soil in African conditionssays Terrab.
“We took a gamble that the African fertilizer market was not going to look like any other, in the same way that mobile was more suited to African conditions. We adapt our products to the situation of the African countries in which we operate, that is to say almost all of Africa, that is to say about 40 countries. We have decided not to bring standard fertilizers, but to manufacture bespoke fertilizers, so to speak, or adapted, personalized for the soil and the plant.“, continues the manager.
On the issue of the Sahara and phosphate resources, Terrab clarifies: “I want to put things in perspective because if you unfortunately look at the literature, even a recent book written on phosphate, most of the documents claim that the majority of Morocco’s phosphate reserves are in the Moroccan Sahara, the southern regions . This is not the case“.
According to the CEO of OCP, this represents only 2% of the reserves. The main phosphate deposits are in northern Morocco. “That’s not even our number. This is a figure from the US Geological Survey (USGS) and the International Fertilizer Development Center (IFDC). Many institutions have this 2% figure“, he underlined.
As a reminder, the OCP is today one of the largest contributors to the national economy. Last December, the Group announced a vast investment program in renewable energies and seawater desalination, with a budget of 130 billion dirhams.