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Energy and Resources Agrium, Potash Corp. face new challenge over African phosphate imports

A Potash Corp. supervisor examines potash inside a storage facility near Saskatoon in 2013.

David Stobbe/Reuters

A South African court decision, allowing the seizure of a cargo ship with 50,000 tonnes of phosphate, could open the door to renewed challenges of Canadian imports from a disputed territory in the deserts of North Africa.

Two Canadian companies, Potash Corp. and Agrium Inc., last year accounted for nearly half of all exports of phosphate from Western Sahara, a territory claimed by Morocco since 1975. Those shipments could face new scrutiny and more intense legal challenges as a result of the South African court decision.

The court case in South Africa is believed to be the first time a national independence movement has won a legal action to intercept the export of state property.

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Morocco claims that Western Sahara is part of its territory, but many countries consider it an independent nation under Moroccan occupation. It has been one of Africa's biggest territorial disputes for decades. Supporters of its independence have called it the last case of colonization in Africa.

By importing phosphate from Moroccan-controlled parts of Western Sahara, the Canadian companies are giving economic support to Morocco's occupation of the territory, according to the Sahrawi Arab Democratic Republic (SADR), which is recognized by dozens of countries as the legitimate government of Western Sahara.

Phosphate is widely used for agricultural fertilizer. The two Canadian companies – which are in the process of a merger – insist that their imports are not a violation of international law. They say their imports are providing economic and social benefits to the people of the territory.

Earlier this month, the SADR and its independence movement, the Polisario Front, obtained a court order from the High Court in the South African city of Port Elizabeth to authorize South Africa to seize a Moroccan cargo ship, the NM Cherry Blossom, which had docked in the port city on its way to New Zealand carrying 50,000 tonnes of phosphate, worth an estimated $5-million (U.S.).

South Africa, like many African countries and the African Union itself, is a strong supporter of the Western Sahara independence movement.

The court injunction was granted temporarily, without waiting for a response from the ship owners. The owners will get their chance to respond to the order at a court hearing on Thursday, where they will argue for the ship to be released. The Polisario Front, at the same hearing, will seek a final order to keep the cargo in the port until the court has heard Polisario's bid to send the cargo back to Western Sahara.

In the meantime, the ship remains in the bay outside Port Elizabeth, under South African jurisdiction.

Jeffrey Smith, a Canadian lawyer who serves as general counsel to the SADR government, says the government will use the South African case as a precedent to help it pursue the frequent Canadian shipments from Western Sahara.

He said the government will also use a decision last December by the European Court of Justice, which ruled that Moroccan exports from Western Sahara could not benefit from trade agreements between Morocco and the European Union.

The SADR government has already warned Potash Corp. that it could sue the company for compensation for the phosphate shipments. It says the Western Sahara people have suffered about $400-million in economic losses as a result of the company's imports from the territory.

Randy Burton, a spokesman for Potash Corp., said the company could not comment on the South African court ruling, since the case is still continuing. But in the past, the company has argued that its imports from the Moroccan company have helped to provide jobs, training, education, local investment and other benefits to the people of Western Sahara.

"Any decision to cease doing business in the region on the basis of a political judgment could undermine the economic well-being of the region," the company says in a statement on its website.

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