JOHANNESBURG (miningweekly.com) – Emerging plant nutrient producer Kropz will seek admission to trade on the Aim in London, where it intends raising the funds required to complete the upgrading and commissioning of its advanced-stage phosphate project in South Africa, as well as cut debt and develop a wider African asset base.
The initial public offering is coinciding with the bottoming of the phosphate rock market, with prices now reaching beyond the $100/t mark.
Mining intelligence company CRU predicts that phosphate rock prices will rise in the long term, spurred by escalating population growth, changing global dietary patterns and decreasing arable land, resulting in increases in demand and improvements in phosphate fertiliser prices.
Kropz has spent $120-million to bring its Elandsfontein phosphates mining and processing project in South Africa’s Western Cape to 95% completion and expects to require an additional $16-million to cover its augmentation.
Production at Elandsfontein, which hosts a low cadmium phosphate rock that meets proposed European Union requirements, is scheduled to begin in the second half of next year and to produce 800 000 t/y of phosphate rock concentrate at steady state. The main driver of phosphate rock demand is the need to boost crop yields and increase global food supplies to feed an expanding world population.
Elandsfontein’s initial mine life is 14 years from a compliant 101-million tonne resource at 7.7% phosphorus pentoxide (P2O5) and a probable 63.6-million tonne reserve at 9.6% P2O5.
The vision of the company, headed by CEO Ian Harebottle, is to develop over time into an integrated, mine-to-market plant nutrient company focused on sub-Saharan Africa, which has the fastest-growing population in the world, with food demand expected to triple by 2050, and the region's subsequent fertiliser needs anticipated to rise accordingly.
Kropz has submitted for an exploration prospect in Ghana and potential exists to extend life-of-mine at Elandsfontein. In addition, Kropz is considering acquisitions to increase production.
Its directors believe that being a publicly traded company will also assist in achieving its strategic objectives, which include taking advantage of additional opportunities in the fertiliser supply chain.
The company has secured several offtake agreements ahead of production, including a cornerstone agreement for one third of its production at market prices with Foskor, South Africa’s only vertically integrated producer of phosphate ore, phosphoric acid and granular fertiliser, in which the State-owned Industrial Development Corporation is the controlling shareholder. It will ship phosphates from the Port of Saldanha to Richards Bay, where the Foskor plant is located. This will be done at a transport cost lower than what it costs Foskor to transport phosphates from its own mine in Phalaborwa, Limpopo, to Richards Bay.
The Port of Saldanha is a mere 50 km from the developing Kropz operation, enabling it to target demand in the Atlantic and Indian Ocean markets, with significant freight advantages over North African producers.
Besides being a rand hedge for Foskor, the low cadmium content of the Kropz ore will also provide Foskor with greater efficiency potential.
Kropz’s other offtake agreements already concluded involve marketing into the Americas and India through major trading companies, making it clear that the company is not going to struggle to sell its rock.
Kropz’s black economic empowerment partner is African Rainbow Capital, the R9-billion black-owned investment bank headed by Patrice Motsepe.
Phosphorus, an element for all forms of life that cannot be substituted or recycled, is an ingredient for the downstream fertiliser market – “and ultimately human survival itself”, Harebottle states in a release to Creamer Media’s Mining Weekly Online.
As the world’s population continues to grow, urbanise and industrialise, farm land per capita is decreasing, which is increasing reliance on plant nutrients to yield more food from less land.