South African billionaire Patrice Motsepe’s $162 million phosphate bet hits trouble

South African billionaire Patrice Motsepe’s nearly decade-long investment in phosphate producer Kropz Plc is facing a setback after the company moved to restructure its only operating mine, putting hundreds of jobs at risk. 

London-listed Kropz said Monday it will restructure the Elandsfontein mine, about 70 miles northwest of Cape Town, after investing R2.6 billion ($162.6 million) in the project. The company will halt production of phosphate rock as it struggles to make the operation profitable. 

Kropz blamed continued disruption from the Middle East conflict for putting pressure on the global fertilizer market. Motsepe’s African Rainbow Capital owns about 90% of the company.

Trollope warns of job cuts at Kropz mine

Trollope Mining Group, which operates the Elandsfontein mine for Kropz, warned employees in a Sept. 2 letter that its contract could be “drastically reduced if not completely terminated” by the end of November. As many as 238 jobs could be affected. 

Motsepe first invested in Kropz in 2018 and increased his stake through African Rainbow Capital as the company provided financial support to keep the project going. Kropz has struggled to meet production targets at Elandsfontein and has faced opposition over plans to mine in a sensitive area near a national park. 

In 2024, Kropz secured a R140 million ($8.7 million) bridge loan from ARC Fund, its largest shareholder, to cover immediate cash needs at Elandsfontein. 

The mine, which holds South Africa’s second-largest phosphate deposit, is located on the West Coast of the Western Cape. Kropz acquired the project in 2010. 

African Rainbow Capital declined to comment beyond Kropz’s statement. Kropz and Trollope did not immediately respond to requests for comment.

Kropz abandons phosphate rock production

Kropz shares fell 39% in London following the announcement, leaving the company with a market value of about £9.87 million ($13.4 million). That compares with a peak valuation of roughly £120 million ($162.5 million) in 2022. 

“The disruption to key fertiliser inputs has adversely affected global fertiliser production and demand for phosphate rock,” Kropz said. 

The company plans to stop producing phosphate rock and sell down its existing stockpiles. It will instead focus on nanophos, a soft phosphate product designed to release nutrients more gradually. 

For Motsepe, the latest setback marks a difficult turn for an investment that once offered the prospect of building a major African phosphate business. 

African Rainbow Capital, the investment holding company founded in 2015 as part of Ubuntu-Botho Investments, has interests spanning mining and financial services. Motsepe’s fortune is estimated at $3.7 billion by Forbes.