Cash-strapped phosphate sector challenges Tunisia's export goals

TUNIS – Tunisia is seeking to more than double its phosphate production over the next decade in a bid to strengthen exports and boost hard-currency earnings, but financial constraints, ageing infrastructure and persistent logistical challenges threaten to slow the ambitious expansion plan.

The state-owned Gafsa Phosphate Company (CPG) has unveiled a strategy aimed at raising commercial phosphate production to 9.4 million tonnes by 2035 through investments estimated at nearly 2.7 billion Tunisian dinars ($930 million), according to officials who presented the plan before the Finance and Budget Committee of the National Council of Regions and Districts.

The target marks one of the most ambitious attempts in years to revive a sector that once ranked among Tunisia's economic pillars but has struggled to recover from more than a decade of disruptions following the 2011 uprising.

CPG Chief Executive Omar Bouzouada told lawmakers that the company, together with the state-owned Tunisian Chemical Group (GCT), is working with government authorities on a comprehensive reform strategy designed to restore the sector's competitiveness and place it back at the centre of Tunisia's export-driven growth model.

However, Bouzouada acknowledged that both companies face severe financial pressures that are limiting their ability to carry out development projects and modernisation programmes.

"The difficult financial situation of CPG and the Tunisian Chemical Group has constrained their capacity to implement their development plans at both regional and local levels," he said during the parliamentary session.

Under the roadmap, phosphate production is expected to reach around 4.5 million tonnes in 2026 and rise to five million tonnes by 2028 before accelerating towards the 2035 target.

The objective represents a dramatic increase compared with Tunisia's average phosphate production over the past decade, which fluctuated between 3.2 million and 3.4 million tonnes annually.

Before 2011, Tunisia produced roughly 8.2 million tonnes of phosphate a year and ranked among the world's leading producers. Social unrest, labour disputes, transport disruptions and underinvestment have since eroded output and reduced the country's share of global markets.

Bouzouada said the sector continues to face significant obstacles, including transportation bottlenecks and chronic shortages of water used in phosphate washing and processing operations.

To overcome those challenges, CPG has proposed a series of urgent measures, including securing new financing to meet liquidity needs, increasing exports, restructuring debts, strengthening road and rail transport networks and ensuring adequate supplies of key industrial inputs.

"The restructuring programme is based primarily on rescheduling bank loans, addressing the debts of public suppliers, completing necessary maintenance work, securing the supply of raw materials and improving the readiness of production units," Bouzouada said.

Officials from the Tunisian Chemical Group painted a similarly difficult picture, highlighting declining utilisation rates at production facilities and lower volumes of processed phosphate.

They attributed the situation to weaker phosphate supplies from CPG, cash shortages affecting purchases of raw materials, ageing equipment and repeated unplanned shutdowns.

To reverse the trend, the group plans to accelerate maintenance programmes, improve supply security, raise operational efficiency and fast-track the long-delayed Mdhilla 2 project.

Lawmakers stressed the need to speed up reforms at both CPG and GCT, arguing that reviving the phosphate industry is critical given its strategic role in the national economy.

They also requested clarification on plans to modernise equipment, increase the added value of phosphate products and reduce industrial water consumption, including through the use of treated wastewater.

Sector officials responded by emphasising that phosphate remains a key engine of Tunisia's economy and that recent efforts to unify governance between CPG and GCT are intended to improve efficiency and coordination throughout the industry.

The stakes are high for Tunisia's broader economy. Phosphate accounts for around 4 percent of gross domestic product and roughly 15 percent of exports, making it one of the country's most important sources of foreign currency alongside olive oil.

Official figures show phosphate exports generated approximately 2.4 billion dinars during the first quarter of 2026, representing nearly 15 percent of Tunisia's total exports of around 16 billion dinars during the period.

For a government seeking to narrow fiscal deficits and ease pressure on public finances, restoring the phosphate sector has become both an economic priority and a symbol of Tunisia's ability to revive industries that once underpinned growth.

Yet analysts note that achieving the 9.4 million-tonne target will require not only substantial investment but also solutions to longstanding structural problems that have repeatedly undermined production over the past decade.