Kropz reaches agreement with Transnet over phosphate exports from Elandsfontein

Phosphate fertilizer

AIM-listed phosphate development firm Kropz seems to have resolved its port capacity issues with Transnet which, in May, told Kropz that it did not have capacity to export phosphate rock from Saldanha Bay as planned.

Instead, Transnet said it would provide “an alternative solution for a portion of the Elandsfontein production through the port of Cape Town.” The problem with that, according to Kropz, was that “sales through Cape Town would incur additional transportation costs due to the greater travel distance involved.

According to an update released to the London Stock Exchange today Kropz said the company had now received a draft port access agreement from Transnet for long-term exports of phosphate rock through the port of Saldanha and noted “the contract is now being finalised between the parties.”

Kropz added that, “exports through Cape Town will only be required for a maximum of 30% of Elandsfontein’s export production of approximately one million tons per annum and only if capacity through Saldanha is unavailable for a period of time.”

The update said Kropz was on track to commission Elandsfontein – situated on South Africa’s West Coast – in December despite the COVID-19 pandemic and a nationwide strike by the National Union of Metalworkers of South Africa (NUMSA) in October.

The company said the project schedule remained “tight” and could be at risk from a possible fourth wave of the COVID-19 pandemic in South Africa. The first exports of phosphate rock from Elandsfontein are due to be shipped during the first quarter of 2022.

According to the update earthworks and civil construction are complete, the fabrication and erection of structural steel platework and piping are complete and mechanical equipment is installed.

Site activities are currently split between finalizing the piping installation and the electrical, control and instrumentation installation and early commissioning activities.

Kropz said the piping installation work was hampered by the NUMSA strike which affected the off-site workshop related work on the rubber-lined pipe closures which, in turn, affected the site work.

“Mitigation plans were put in place but employees were intimidated and the mitigation efforts had to be halted. The NUMSA strike commenced on October 5 and ended on October 21. No further impacts of the NUMSA strike on the project schedule are anticipated.”

Kropz has faced years of legal challenges over development of the mine which is close to Langebaan Lagoon – part of the West Coast National Park – and has been bitterly opposed by the West Coast Environmental Protection Association.

In September the company had to secure an additional R200m from major shareholder African Rainbow Capital because of a funding shortfall.

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