Several US phosphate market players this week were stunned by the news that Moroccan phosphate producer OCP and domestic agribusiness CHS will work in a partnership to build the first phosphate production plant on US soil in over 40 years.
The announcement made on 26 August that OCP and CHS will build a roughly 1.3mn metric tonnes (t) phosphate fertilizer production plant in Waggaman, Louisiana, took both the domestic and global market by surprise as OCP is currently in the middle of a review on the countervailing duties against its phosphate imports into the US. The duties were implemented by the US Department of Commerce (DOC) in 2021 after US producer Mosaic alleged that OCP materially injured the US market with its phosphate imports.
In late June US president Donald Trump said he would temporarily suspend countervailing duties on certain Moroccan phosphate imports until early 2027 to address domestic farmer fertilizer supply concerns. In late July Commerce recommended that the duties remain on Moroccan phosphate imports because OCP's phosphate production is still subsidized by its government. Now the International Trade Commission (ITC) is considering whether removing the duties will once again materially injure the US phosphate industry. The ITC's ruling is expected soon, as the final results of the duty review should be published around 28 October, 240 days from the start of the review, according to a Federal Register notice.
But market conversations were also active this week because just one day before the project's announcement, Mosaic announced it would reduce a portion of its workforce at its Uncle Sam and Faustina, Louisiana, facilities as phosphate operations there have been curtailed by the ongoing sulfur supply shortage.
Mosaic has been monitoring the sulfur supply shock and took action to manage costs. It has idled phosphate production at the Uncle Sam and Faustina facilities, the duration of which could exceed six months, according to the announcement. Ammonia production at Faustina will continue uninterrupted, Mosaic said.
Following the OCP, CHS partnership announcement, and the wave of Mosaic layoffs, many market players are puzzled by the US government's most recent action.
"It doesn't make a lot of sense that we are going to build a new fertilizer plant when the plants right next door are potentially closing," one trader said. "Why wouldn't the US government just subsidize Mosaic's business instead of subsidizing another government," they added.
Other traders expressed uncertainty of the project all together, stating that the $450mn price tag for the project seems implausible given how much other producers are likely to spend on their own production operations and maintenance.
The action on OCP focusing on shipping phosphoric acid to the facility in Waggaman instead of phosphate rock also caught attention, as it spares the plant's owners from dealing with gypsum containment on US soil but sets the operation up instead to face elevated freight costs.
The US government has been vocal recently in its focus of bolstering domestic fertilizer production, hence the US Department of Agriculture's (USDA) presence at the OCP-CHS project announcement event. CHS has applied for the USDA's Fertilizer Investment and Expansion for Long-term Domestic Supply grant program that only recently stopped taking applications, meaning the joint venture and other projects could soon receive funding from the federal government.
