World’s largest exporter of phosphate undergoes major transformation
OCP CEO Mostafa Terrab walks MIT Sloan students through the process in a talk on campus
February 14, 2014
Mostafa Terrab, SM ’82, PhD ’90
OCP S.A. has been a successful phosphate mining company for more than 90 years, but it needed large-scale restructuring, said CEO and Chairman Mostafa Terrab, SM ’82, PhD ’90, at the first Dean’s Innovative Leader Series talk of the year.
Terrab, who joined Morroccan-based OCP (formerly known as Office Chérifien des Phosphates) in 2006, has helped to lead growth at the world’s largest exporter of phosphate rock and phosphoric acid. He also emphasized the company’s commitment to sustainability.
OCP extracts 28 million tons of phosphate, an inorganic chemical, from open-pit mines and produces 4.5 million tons of phosphate fertilizer, which is used on most crops grown around the world. Given the world’s expanding population and food needs, demand for phosphate fertilizer is expected to rise. Up to 85 percent of the world’s reserves of phosphate are thought to be in Morocco.
Terrab first began the company’s transformation by taking a detailed look at the business. He noticed that it was losing money each year and had negative equity on its balance sheet. “The only way out was to increase productivity,” he said.
OCP, which has more than 20,000 employees, tripled its fertilizer production capacity, which meant doubling its mining capacity by opening up four new mines. A completely new business model arose, as, unlike most mining companies, OCP began selling directly to consumers. This shift meant marketing had to change. The transformation also saw the opening of 10 new fertilizer plants and the development of plans for a slurry pipeline designed to reduce phosphate losses and water waste—especially important in a semi-arid country such as Morocco.
Terrab then focused on OCP world headquarters—“a symbol of hierarchy and bureaucracy”—in Casablanca, where 1,500 employees were based. “I shocked everybody by saying, ‘What are we doing in Casablanca?’ There are no mines and no phosphates in Casablanca and our clients are not in Casablanca,” he said. OCP decentralized and reduced the headcount at headquarters to 400 people. Employees were relocated to industrial and mining locations.
The move made the company more efficient. As an example of the decentralization, OCP’s procurement process was also streamlined from a cumbersome process requiring 60 separate signatures to just three steps.
Part of OCP’s transformation has also been its commitment to sustainability. The 146-mile Khouribga-Jorf Lasfar slurry pipeline will transport phosphate from the Khouribga mines to the commercial port of Jorf Lasfar, located on the Atlantic Ocean. Traditionally, the phosphate was transported by train between the two sites and had to be washed and dried thoroughly before it could go on the rails. The pipeline, scheduled to open soon, means the phosphate doesn’t have to undergo such a process, and has the added benefit of being able to be transported downhill, since Khouribga is 820 meters above sea level. Terrab said the pipeline will save water and transportation costs.
“Here is an example of an engineering project … that improves our productivity and our environmental footprint,” Terrab said.
OCP has a long and established relationship with MIT Sloan, including with MIT Sloan Executive Education and MIT Sloan Action Learning. Terrab also works with a number of MIT faculty members on various sustainability issues.
Terrab’s talk was co-sponsored by the GlobalHealth Lab and the MIT Sloan Sustainability Initiative.