South Africa’s Industrial Development Corporation (IDC), the state-owned development financier supporting industrial growth and job creation, swung to a R4.65 billion ($288 million) loss in the 2026 financial year, largely due to losses at its subsidiaries, particularly Foskor.

The loss reversed a R329 million ($20.57 million) profit in 2025, while group revenue declined to R20.6 billion ($1.29 billion) from R21.7 billion ($1.36 billion). Despite the group loss, the IDC itself remained profitable, recording R2.3 billion ($143.78 million) in profit from R11 billion ($687.65 million) in revenue.

Subsidiaries drive IDC into the red

The group’s loss was largely driven by its subsidiaries, with Foskor emerging as one of the biggest contributors. Foskor, a South African producer of phosphate and phosphoric acid used in fertiliser production, reported a loss of R2.8 billion ($175.05 million) in 2026, compared with a R277 million ($17.32 million) loss in 2025.

The company operates phosphate mines in Phalaborwa, Limpopo, and an acid division in Richards Bay. Its operations have faced persistent financial and logistical challenges, including dependence on Transnet to move raw materials to its Richards Bay processing facilities.

Revenue from fertiliser and acid sales fell to R5.4 billion ($337.64 million) in 2026 from R5.9 billion ($368.9 million) a year earlier, alongside a decline in income from mining operations.

The IDC had targeted higher production from Foskor’s acid division and an operating profit achievement of 90% of board-approved targets. The subsidiary failed to meet either objective, reaching only 65% of its approved production target for the acid division. The IDC is estimated to hold between 59% and 85% of Foskor and has previously sought to reduce its exposure to the business through potential sales to other investors.

IDC creates more than 71,000 jobs

Despite its financial loss, the IDC exceeded several of its employment targets during the year. The corporation set 18 key performance indicators for the 2025/26 financial year and achieved eight. Its initial target was to create just under 30,000 jobs, but it ultimately created more than 71,000 jobs during the period.

The IDC also met its targets for work opportunities through the Social Employment Fund, reinforcing its role as a major government-backed instrument for employment creation.

However, it fell short on other targets, including the value of on-balance-sheet funding disbursed and the planned exit of Foskor from business rescue.

IDC backs ArcelorMittal amid steel crisis

The IDC has also played a central role in efforts to prevent further industrial decline at ArcelorMittal South Africa, in which it holds more than a 6% stake. The Gauteng-based steelmaker has faced mounting pressure from high electricity and transport costs, cheaper Chinese imports and weak demand, prompting concerns over the viability of its long-steel operations.

In 2025, ArcelorMittal sought approximately R3.1 billion ($170 million) in financial support to prevent the permanent closure of its steel mills, a move that threatened thousands of direct and indirect jobs. The IDC provided financial support during the crisis, including approximately R1 billion in short-term funding, a R380 million ($24 million) credit facility and a further R1.68 billion ($105.04 million) support package in March 2025.

Since the end of the 2026 financial year, the IDC has approved a further R500 million in funding for ArcelorMittal South Africa, as it continues to navigate weak financial performance and uncertainty around the future of its long-steel operations.

More capital committed to distressed industry

The IDC has also committed R2.5 billion ($156.3 million) to Tongaat Hulett following its entry into business rescue. The funding is intended to preserve operations and prevent liquidation, with the IDC expected to receive a large but non-controlling stake alongside Vision Group.

The latest results underscore the challenge facing the IDC: its core business remains profitable, but substantial interventions in distressed industrial companies are weighing heavily on group earnings.

With continued exposure to Foskor, Tongaat Hulett and ArcelorMittal, the development financier must balance its mandate to preserve jobs and industrial capacity with the need to maintain financial sustainability.