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DE RUEHCL #0010/01 0141503
ZNY CCCCC ZZH
R 141503Z JAN 09
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 8259
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0001
RUEHIL/AMEMBASSY ISLAMABAD 0215
RUEHMD/AMEMBASSY MADRID 3837
RUEHNE/AMEMBASSY NEW DELHI 0058
RUEHFR/AMEMBASSY PARIS 0676
RUEHRB/AMEMBASSY RABAT 8501
RUEHNEC/AMCONSUL KOLKATA 0003
RUEHBI/AMCONSUL MUMBAI 0023
RUEHUNV/USMISSION UNVIE VIENNA 0002

C O N F I D E N T I A L SECTION 01 OF 03 CASABLANCA 000010 
 
SIPDIS 
 
STATE FOR NEA/MAG 
STATE PLS PASS TO COMMERCE FOR NATHANIEL MASON 
 
E.O. 12958: DECL: 01/07/2019 
TAGS: AG AMCHAMS ECON EIND ETRD MNUC MO PGOV PREL
SUBJECT: MOROCCO, INDIA, PHOSPHATES AND BEYOND 
 
REF: 07 RABAT 1657 
 
CASABLANCA 00000010  001.3 OF 003 
 
 
Classified By: CG Elisabeth Millard for reasons 1.4 (b), (d). 
 
¶1. (SBU) Summary: Morocco exports about 50 percent of its 
production of phosphoric acid to India, a dual-use item used 
extensively to produce fertilizer for the country's 
agricultural sector and a potential source for uranium. The 
value of Morocco's exports to India totaled USD 1.4 billion 
in the first ten months of 2008. To secure and increase its 
stake with Morocco's National Phosphate Office (OCP), India 
has implemented a three-pronged approach, which entails 
pursuing long-term mining and exploration contracts, joint 
ventures with OCP,s phosphoric acid facilities, and 
neutrality on the Western Sahara issue. While 99 percent of 
Morocco,s exports to India are linked to the phosphate 
business, India's interest in Morocco is increasingly 
extending to other industries like the outsourcing and 
automobile sector. End Summary. 
 
----------------------------- 
India's Demand for Phosphates 
----------------------------- 
 
¶2.  (SBU) India imports 50 percent of the world's production 
of phosphoric acid, a product used extensively to produce 
fertilizer for the country's agricultural sector. According 
to Indian diplomats here, India is increasingly looking to 
Morocco to meet its phosphate needs in light of its rising 
demand for fertilizer. (Note: Morocco holds about 
three-quarters of the world,s reserve of phosphates and is 
the largest exporter of phosphate rock and phosphate 
derivatives, with about 38 percent of the overall world 
market in those products. End Note.) Morocco exports about 50 
percent of its phosphoric acid and about 22 percent of its 
rock phosphate to India, making the subcontinent Morocco's 
largest phosphate customer. The value of Morocco's exports to 
India totaled USD 1.4 billion in the first ten months of 
2008, a significant increase from USD 560 million in 2007. 
(Note: The price of phosphate increased from a median of USD 
100 per rock ton in 2007 to a high of USD 400 per rock ton in 
¶2008. End Note.) 
 
------------------------------------------ 
Morocco-India Trade: Phosphates and Beyond 
------------------------------------------ 
 
¶3.  (SBU) From 2001 to 2007, bilateral trade between Morocco 
and India doubled to USD 880 million. During this period, 
Indian exports to Morocco rose more than five-fold to USD 320 
million, while Morocco's exports to India increased by over 
USD 300 million reaching USD 560 million. Indian commercial 
officials at the Embassy here told us that total bilateral 
trade in 2008 was expected to reach USD 1.9 billion, marking 
a 125 percent increase in a single year. While much of the 
growth is due to Morocco,s export of phosphates, India,s 
interest in Morocco is increasingly extending to other 
sectors. 
 
¶4.  (SBU) In particular, Tata Group's joint venture with 
Morocco's National Phosphate Office (OCP) has opened the 
doors to other business opportunities in the outsourcing and 
automobile sectors. Indian outsourcing firms like Tata 
Consulting Services (TCS) and Genpact Limited have recently 
started to target the Francophone European market. The CEO of 
TCS, Mehdi Sahel, told Econof that India is looking to 
duplicate its IT and usiness Process Outsourcing (BPO) 
success with te Anglophone market, utilizing Morocco's 
geographic and linguistic advantages to target Francophone 
Europe. "Within the next 5 years Morocco can easily become 
the India of Africa", said Sahel. 
 
¶5.  (SBU) India's Commercial Attach in Rabat argues that 
"Morocco's free trade agreements with the European Union and 
the United States make it an ideal export platform for Indian 
companies seeking to enter not only the Francophone market in 
the north, but the sub-Saharan Africa market in the south". 
Within Morocco,s automobile sector, Tata Motors has a 21 
percent stake in Hispano Carrocera, a company which just 
landed a long-term contract to outfit 800 urban buses in 
 
CASABLANCA 00000010  002.3 OF 003 
 
 
Casablanca. In addition, Tata Motors hopes to target 
Morocco,s middle class with its low priced vehicle, the 
Nano, in the near future. 
 
--------------------------------------------- ------ 
The Indian Approach to Securing Morocco's Phosphate 
--------------------------------------------- ------ 
 
¶6.  (C) Despite India's growing economic relations with 
Morocco, it must nevertheless deal with competition from 
other interested countries, like Indonesia and Pakistan. To 
secure and increase its stake with Morocco's National 
Phosphate office (OCP), India has developed a three-pronged 
approach. First, it has pursued mining and exploration 
contracts with OCP. During his 2008 visit to Morocco, Ram 
Paswan, India,s Minister of Chemicals, Fertilizer, and 
Steel, signed several long-term contracts with Morocco,s 
Phosphate Office. Meryem Chami, Staff Assistant to OCP's 
Managing Director, told Econoff that India was awarded a 
number of contracts to operate in the highly coveted Jorf 
Lasfer Phosphate Processing Facility Plant. Chami also said 
OCP is presently reviewing a proposal that would permit 
India's National mineral Development Corporation (NMDC) to 
participate in the mining of Morocco's rock phosphate. (Note: 
Please strictly protect this sensitive commercial 
information. End Note.) 
 
¶7.  (SBU) Second, India has entered into joint business 
ventures with OCP's phosphate processing facilities. For 
example, IMACID, a phosphoric acid producer in Morocco, is a 
joint venture created between the OCP group and two Indian 
firms ) Chambal Fertilizer & Chemical Limited (CFCL) of the 
Birla Group and Tata Chemicals Limited of the Tata Group. 
Moreover, the OCP group owns a 50 percent equity stake in 
India,s fertilizer company, Paradeep Phosphate Limited 
(PPL), which has a multi-year supply arrangement of rock 
phosphates from Morocco to India. 
 
¶8.  (SBU) Third, India has adopted a neutral stance on the 
Western Sahara issue. India recognized Western Sahara in 1985 
but withdrew that recognition in 2000 as its phosphate 
cooperation with Morocco improved. This neutrality on a 
thorny political issue arguably makes India a more attractive 
economic partner for Morocco. 
 
--------------------------------------------- ---- 
Assessing the Benefits of Morocco's Ties to India 
--------------------------------------------- ---- 
 
¶9.  (SBU) India's presence in Morocco elicits mixed 
sentiments. On the one hand, the GOM and in particular OCP 
have benefited financially from its rapprochement with India. 
In fact, Morocco met its 2008 economic growth target in large 
part due to the success of phosphates' increasingly 
preponderant share in Moroccan exports, says Hicham Alaoui, a 
financial analyst at BMCE Bank. On the other hand, concerns 
about India,s role in Morocco loom large amongst Moroccan 
textile operators, who fear that, like their Chinese 
counterparts, Indian firms will undercut them with 
rock-bottom prices. On balance, India's presence in Morocco 
is a positive development, as reflected in the fact that 
Morocco enjoys a significant trade surplus with the 
subcontinent.  As TCS,s Sahel told us, "Who would have 
thought! Let,s run with it!" 
 
------- 
Comment 
------- 
 
¶10. (SBU) Bilateral trade between Morocco and India presently 
favors Morocco, but given the price volatility of such raw 
materials and their derivatives, Morocco should begin 
thinking about shifting its trade focus towards the service 
sector. Specifically, India is a world leader in IT and BPO 
services ) one of the key pillars of Morocco,s "Emergence" 
strategy, which looks to create a modern and outward looking 
services sector. Indian firms like TCS are poised to 
capitalize on Morocco,s outsourcing infrastructure and 
should be encouraged to do so by the GOM. 
 
 
CASABLANCA 00000010  003.3 OF 003 
 
 
¶11. (C) Nonproliferation considerations: The International 
Atomic Energy Agency places the uranium resources in 
Morocco's phosphate deposits at around six million tons, 
which corresponds to twice the world,s uranium resources. 
(Note: In October 2007, OCP signed an agreement with Areva, 
France's nuclear energy company, to launch a joint study into 
the feasibility of an industrial site producing uranium from 
phosphoric acid. End Note.) Although phosphate exported from 
Morocco to India reportedly is exclusively for agricultural 
use, it could conceivably also be a secondary source for raw 
uranium. We understand India's Department of Atomic Energy 
has facilities that can recover uranium from phosphate rock 
and phosphoric acid, but we have no information indicating 
that the Indians are processing Moroccan phosphate through 
this extraction process. End Comment. 
MILLARD