Foskor chairperson Bobby Godsell reported on Tuesday that the company’s board was conducting a comprehensive review of the group’s underperforming operations with the aim of developing a sustainability plan within the coming six months.
Foskor, which mines phosphate rock and magnetite in Limpopo and produces fertiliser products at an acid plant in KwaZulu-Natal, reported a loss of R180-million in 2019, compared with a loss of R760-million in 2018.
Responding to a question posed at the Industrial Development Corporation’s (IDC’s) results on Tuesday, Godsell said the review would investigate why Foskor “has underperformed in production, why it has underperformed in costs and why it has underperformed in profitably selling its products, both domestically and abroad”.
The IDC, which is a State-owned development finance institution, owns 59% of Foskor.
The well-known mining personality added that the board would not contemplate any move to secure a strategic equity partner for the business before the sustainability plan had been agreed upon. “Once we are a bit clearer . . . then we can look and think about other possibilities, such as strategic equity partners.”
IDC CEO TP Nchocho indicated that consideration would indeed be given, in the future, to the possibility of securing a strategic equity partner or technical partner for Foskor.
Should such a partner be sought, the IDC would likely follow an approach similar to that pursued during its recent exit of the Scaw group of companies.
Nchocho noted that Foskor’s 2019 loss had been narrower than the R400-million initially anticipated. He also reported that leadership changes had been made at both the board and executive levels in an effort to turn around the company and improve labour relations.
To stabilise Foskor’s financial performance, the business would have to be modernised and possibly downscaled, Nchocho added.
In addition, it might have to be restructured to focus primarily on the South African and regional markets, rather than on export markets.