By Antony Sguazzin.
South African billionaire Patrice Motsepe’s near decade-long backing for phosphate producer Kropz Plc has backfired, with the company announcing the restructuring of its sole operating asset and one of its contractors warning of hundreds of job losses.
On Monday, London-based Kropz said it will restructure its Elandsfontein mine, about 70 miles northwest of Cape Town, after R2.6 billion of investment, halting production of its main product as it struggled to make a profit partly because of the impact of war between the US and Iran on the global fertilizer industry. Motsepe’s African Rainbow Capital owns about 90% of Kropz.
Trollope Mining Group, which mines on Kropz’s behalf at Elandsfontein, said in a September 2 letter to employees seen by Bloomberg that its “contract will be drastically reduced if not completely terminated at the end of November” and 238 jobs may be cut.
Motsepe first invested in the company in 2018; through his African Rainbow Capital company, he built up almost total control after a series of bailouts of the mine. Kropz has has struggled to hit production targets at Elandsfontein and courted controversy by trying to mine in a national park.
African Rainbow declined to comment beyond Kropz’s statement. Kropz and Trollope didn’t immediately respond to requests for comment.
Plunging shares
The company’s share price fell 39% in London after the announcement, giving it a market cap of just 9.1 million pounds ($12 million), down from a peak of 120 million pounds in 2022.
“There has continued to be significant financial pressure on the operations arising predominantly from the continued Middle East conflict,” Kropz said in the statement. “The disruption to key fertiliser inputs has adversely affected global fertiliser production and demand for phosphate rock.”
The company will cease output of phosphate rock and will sell down its stockpiles, it said. It will focus on production of so-called nanophos, a soft rock that releases phosphate more gradually.
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