Kropz Plc, the phosphate producer backed by South African billionaire Patrice Motsepe, will cut its own workforce and end its operating and maintenance agreement with contractors at its Elandsfontein mine in South Africa when the contract expires in November.

The company said the operation, located about 70 miles northwest of Cape Town, has about 540 workers, including contractors. The restructuring comes after Kropz invested about $160 million in the project and as weak phosphate market conditions continue to weigh on the business.

Kropz pivots to nanophos production

Kropz will shift its focus toward producing nanophos, a soft-rock phosphate product that releases the fertilizer ingredient more gradually, for the South African market. The company also plans to sell down its existing phosphate rock inventories rather than continue operating the mine at previous levels.

“Kropz will continue maintaining the majority of the unused plant in a care and maintenance state that will ensure a quick return to phosrock production when market conditions become more favourable,” Chief Operating Officer Mark Maynard said in a reply to queries.

The decision to end the contractor agreement is expected to affect jobs at the mine. Contractor Trollope Mining Group separately told employees that its contract may not be renewed, with 238 positions potentially affected.

Motsepe’s investment

Motsepe first invested in Kropz in 2018 and increased his control of the company through African Rainbow Capital, which is now its largest shareholder with about 90% ownership. Kropz has faced difficulties meeting production targets at Elandsfontein, while its plans to mine phosphate in an environmentally sensitive area near a national park have drawn opposition.

The company acquired the Elandsfontein project in 2010. The mine contains South Africa’s second-largest phosphate deposit and is located on the West Coast of the Western Cape. In 2024, Kropz secured a R140 million ($8.7 million) bridge loan from ARC Fund, an investment vehicle of its largest shareholder, to meet immediate cash requirements at Elandsfontein.

Weak fertilizer market

Kropz said Sept. 7 that it would restructure the operation after investing about $160 million in the project. The company attributed the latest pressure in part to continued disruption from the conflict in the Middle East, which has further weakened conditions in the global fertilizer market.

The restructuring means Kropz will retain most of its unused processing plant in a care and maintenance state rather than permanently shut the facilities. That approach is intended to allow the company to resume phosphate-rock production if market conditions improve.

For Motsepe, the changes mark another setback for an investment that had offered the prospect of developing a major phosphate business in Africa. The immediate focus at Elandsfontein will instead be on nanophos production for South Africa and reducing existing phosphate-rock inventories while the company waits for more favorable market conditions.