Port switch to have “large negative impact on value of” Kropz Elandsfontein project

AFRICAN Rainbow Capital Investments (ARC), the JSE-listed investor led by mining magnate, Patrice Motsepe, said in an update that the strong rand and additional transport costs could have “a large negative impact on the value of Kropz Elandsfontein”.

Elandsfontein is a phosphate development in South Africa’s Western Cape province operated by Kropz, a UK-listed company in which ARC has a 47% stake. The company has struggled to bring Elandsfontein to account after unveiling the project in 2018.

Kropz announced in May that it was investigating alternatives after government-owned transport utility, Transnet, said it would not be able to use export facilities at its Saldanha Bay port. There is an option to route a portion of phosphate through the Port of Cape Town, but this would be more costly.

“The impact of a continuing strong Rand, as well as additional transport costs that may result from the alternative solutions, could have a large negative impact on the value of Kropz Elandsfontein despite the current positive trend in the phosphate rock prices,” ARC said in its update today.

In its update, ARC also said that it had reduced its interest in Afrimat, a bulk mining and construction aggregates company, to 16.1% from 18.4% after selling 3.25 million shares for R143m. “Afrimat’s share price has performed well, supported by excellent financial performance,” said ARC.

Afrimat announced in May that it would buy the Gravenhage manganese deposit in South Africa’s Northern Cape province for $45m. Afrimat said at the time that the acquisition of the project represented another step in its diversification strategy.

Commenting on the rationale for the transaction, Afrimat said the prospect had the technical support of a feasibility study and was located 120 kilometers from the company’s Demaneng iron ore mine.