Super Fund warns fertiliser co-operative Ballance over phosphate

Why New Zealand is accused of propping up the illegal occupation of a west African nation.

The New Zealand Superannuation Fund has joined the chorus of pressure on fertiliser co-operative Ballance over using Western Sahara phosphate.

New Zealand companies Ballance Agri-Nutrients and Ravensdown source the majority of their phosphate from the disputed region, importing about $30m a year.

But activists argue the product belongs to an independence movement for Western Sahara, not the Moroccans, who have occupied the area since 1975.

Phosphate awaiting delivery in a storage shed in Christchurch. (File photo)
Phosphate awaiting delivery in a storage shed in Christchurch. (File photo)

The Super Fund's farm manager FarmRight uses phosphate supplied by Ballance on its farms. And it also has a small amount of exposure to listed companies operating in the Western Sahara.

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Head of responsible investment Anne-Maree O'Connor says the fund has "encouraged" Ballance to find alternatives.

"We are active as a shareholder on this issue both domestically, where the fund has a portfolio of rural land investments under management by FarmRight and supplied by Ballance, and in respect of the fund's relatively small exposure to listed companies that operate in the Western Sahara," she said.

"We have made it clear that we expect these companies (and others exposed to the issue through their supply chains) to identify and manage the risks associated with the importation of phosphate from the Western Sahara appropriately.

"This has included meeting with the NZ companies involved in importing phosphate from the Western Sahara to encourage them scope out and consider alternative sources."

New Zealand fertiliser companies are out on a limb over imports of phosphate from the Western Sahara.

However, she noted that the supply of phosphate is an issue for the sector.

"New Zealand's supply chain has been designed around this particular type of phosphate and realistically changes will take some time," she said.

The fund is not invested in any companies that haven't ceased - or committed to stopping  - extracting phosphate from the area.

"We do not have any plans to divest our holdings," she said.

The fund's bosses also briefed Finance Minister Grant Robertson and Prime Minister Jacinda Ardern on the thorny issue, earlier in the year.

The report said: "As a result of an ongoing sovereignty dispute regarding Morocco's occupation of the Western Sahara, importing phosphate from the Western Sahara is contentious and has attracted criticism and media attention globally. As Ballance and Ravensdown provide the majority of the phosphate fertiliser used in New Zealand agriculture and horticulture, the issue is one that affects the whole of the national agricultural sector in New Zealand."

They told the Government that the fund would continue to engage with Ballance and OCP, their Moroccan-state owned supplier "to identify whether any commercially realistic alternatives are available to us".

The firms argue Western Saharan phosphate is soft, better to be processed by Kiwi-based plants.

Ballance Agri Nutrients chief executive Mark Wynne. (File photo)
Ballance Agri Nutrients chief executive Mark Wynne. (File photo)

Ballance chief executive Mark Wynne said the company is very aware of differing opinions on the dispute.

The company had arranged a meeting between OCP and the Super Fund in April, he said.

"We try to be as transparent as we can. This is not a new issue - we've been talking about it in New Zealand for probably 30 years."

Wynne said the company was constantly evaluating other sources and also buy from Vietnam, Christmas Island and South Africa.

"It's like making thousands of little scones, you need good quality ingredients and little ingredients to make the right kind of super phosphate granule... the rock from Morocco is a very good rock for making super phosphate.

"We have tried and continue to try a number of alternatives. We would like to have more choice in our supply base."

Pressure on the New Zealand companies intensified last month when US company Innophos withdrew from the controversial trade.