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Foskor
A reputable, profitable South African phosphate producer
Back in 1951, the South African government’s Industrial Development Corporation (IDC), the state-owned financing institution, created a company called Foskor (Then “Fosfaat Ontginnings Korporasie”). What began as a single mining operation with the sole purpose to make South Africa independent from any phosphate imports, has spent the past 50-plus years quickly growing and developing into a reputable and highly profitable producer and processor of phosphate rock concentrate, phosphoric acid and granular phosphate based fertilizer.
At the heart of this exponential growth, sits Foskor’s people. One such person, Mr. Johan Horn, Foskor’s Vice President of mining, knows more than most what it is to achieve such success.
“I started in 1994 with Foskor as an engineer in training. I actually held a study assistance bursary from Foskor to do my degree and post-graduate degree, as is the custom, you go and work for the company that sponsors your studies,” Horn tells IRJ. “That’s how I came to be at Foskor. I moved through the company ranks and file over the last 16 years.”
This wealth of a personal career history within the Foskor ranks brings with it a lot of strengths for Horn. Not only can he fully appreciate quite how much the company has accomplished along the way, but it places him in a unique position of wisdom as he goes about his everyday business.
“My subordinates or the people at the plant, before they think of an excuse or reason, I’ve used it before. There’s nothing they can’t tell or hide from me, I know the plant like the back of my hand,” he says.
“I’ve done everything from engineer to strategic advisor, to business processes to running technical issues. I’ve gone through the mill, as you say.” The company has clearly presented an attractive long-term environment to Horn, and the growth we have seen since its inception shows no signs of slowing today. We delve deeper into the astounding development history of the company, and look more closely at its goals for market diversification and cost position improvement for 2010.
Founding and phosphate with Foskor
In founding Foskor, the IDC worked to support the fertiliser and farming industry and society in South Africa, both of which rely on phosphate. Horn says that if you look at the overall industry, there are very few privately-owned phosphate operations in the world.
“Most of them are government-owned or very heavily government-supported. That’s the same in South Africa. The phosphate mining industry has been started by the South African government,” he continues. “It has been so until 2006 when we sold 2.5 per cent of the business to an Indian based company called Coromandel Fertilisers Limited. We also then entered into a business assistance agreement with them whereby they assist us to improve the business and then from the improvements they are allowed to acquire additional shareholding.”
Today, Coromandel is a 15 per cent shareholder in Foskor and in 2008 the companies converted their business assistance agreement into a technical assistance agreement. Now Coromandel assists Foskor in terms of technical matters, no longer only on the business side.
“There is also a process underway of further bringing in Black Economic Empowerment partners, as well as facilitating shareholding to the community in which we operate, and to the employees,” Horn says. “It’s finalised, it’s just not implemented. We’re in the process of implementation.”
During 2009, as the company moved to strengthen its shareholder base and dealings with those relevant parties, the mine site saw some equally vital, and frankly very impressive, changes.
From “earthmoving” to “mining”—stockpiles to “hard rock open cast mining” Horn says that up until 2009, Foskor took around 50 per cent of its phosphate production from above ground stockpiles. Doing so was economical and much easier operationally, with these resources having been partially mined and processed by our neighbouring company (Palabora Mining Company) for the last 50 years.
“It’s obviously always cheaper to process above ground stockpiles because you’ve already incurred in the past the drilling and blasting costs. It’s always been cheaper to process that material which was stockpiled at a much greater rate than the processing could happen,” Horn explains.
“These stockpiles came to a point where they were going to be depleted, and Foskor had to change over from processing above ground stockpiles to mining and processing hard ore from a new mining operation or a new pit.”
In doing this, Foskor was faced with the monumental task of meeting circa 50 per cent of the material required to feed its plant, and Horn explains that in South Africa, as is commonly the norm the world over, opening up a new pit involves a lengthy process of obtaining licenses, approvals, mining rights and so forth.
“We were successful in obtaining those mining rights and approvals and we had our first blast in the south pit on 22 September 2009, which allowed us now to start the other preparation of that pit in order for us to mine material from that pit as of April 1, 2010,” he says.
“We have now fully-converted all of plants to be fed from the south pit. The phosphate beneficiation plant has four production streams, of which two streams are fed from the northern pyroxenite pit, and two production streams are now being fed from the southern pit, compared to above ground stockpiles in the past.”
The Southern pit is situated about 4.5 kilometres further than the northern operations, which presented Foskor with the choice to truck material from the south pit using dumpers or to install a crusher and an overland conveyor to move the south pit material to the plant.
“If you recall in 2008 we had the big scare in the mining industry with the shortage of tires, and also the price of diesel in South Africa is also a significant part of our production cost,” Horn says.
“We then decided to install a primary crusher very close to the new pit, and a 4.5 kilometre overland conveyor all the way from the pit to the plant operations in order to reduce our reliance on fuel and trucks and tires, and also to further reduce our environmental footprint.”
With the above ground stockpile dependency thwarted, and new mining rights signed, sealed and delivered, Foskor is in as enviable and promising a position as ever.
Foskor continues to grow
The company has clearly and quickly demonstrated its capacity for growth, development and overcoming such unavoidable obstacles as switching sources for 50 per cent of its product, so what comes next? For the Foskor Group, the strategic goal is diversification of its markets and products and to improve its position of the cost curve.
“We need to reduce reliance that the group has on the markets in India, and we also need to diversify our products. We only produce phosphate rock concentrate, phosphoric acid and also granular fertilizer (DAP & MAP) and we need to diversify that product range further down the value chain,” Horn explains.
“That is the key objective for this year. If you look at last year’s performance there’s a huge decrease compared to the 2009 year because of global economic conditions and the crash in commodity prices.”
In light of the global financial crisis and the common hardship many miners suffered in the last financial year, Foskor is determined to bounce back quickly and return delivering the impressive sorts of year-on-year results it is famed for.
“Obviously our second objective for next year is to improve our cost base and improve our cost position, so there’s going to be significant work on our cost structures as well,” Horn adds. “It won’t be anything crazy, we’ll be very responsible in everything we do and it won’t have any significant structural changes. We just need to keep focused.”
Focus is certainly a quality which Foskor has in droves. The company’s history of growth speaks for itself, and the turnaround in sourcing circa 50 per cent of its material to feed the plant only serves to demonstrate that this company is still very capable. It seems like no challenge comes without a solution for Foskor. This is a company focused on finding a way around and above any obstacle.
Back in 1951, the South African government’s Industrial Development Corporation (IDC), the state-owned financing institution, created a company called Foskor (Then “Fosfaat Ontginnings Korporasie”). What began as a single mining operation with the sole purpose to make South Africa independent from any phosphate imports, has spent the past 50-plus years quickly growing and developing into a reputable and highly profitable producer and processor of phosphate rock concentrate, phosphoric acid and granular phosphate based fertilizer.
At the heart of this exponential growth, sits Foskor’s people. One such person, Mr. Johan Horn, Foskor’s Vice President of mining, knows more than most what it is to achieve such success.
“I started in 1994 with Foskor as an engineer in training. I actually held a study assistance bursary from Foskor to do my degree and post-graduate degree, as is the custom, you go and work for the company that sponsors your studies,” Horn tells IRJ. “That’s how I came to be at Foskor. I moved through the company ranks and file over the last 16 years.”
This wealth of a personal career history within the Foskor ranks brings with it a lot of strengths for Horn. Not only can he fully appreciate quite how much the company has accomplished along the way, but it places him in a unique position of wisdom as he goes about his everyday business.
“My subordinates or the people at the plant, before they think of an excuse or reason, I’ve used it before. There’s nothing they can’t tell or hide from me, I know the plant like the back of my hand,” he says.
“I’ve done everything from engineer to strategic advisor, to business processes to running technical issues. I’ve gone through the mill, as you say.” The company has clearly presented an attractive long-term environment to Horn, and the growth we have seen since its inception shows no signs of slowing today. We delve deeper into the astounding development history of the company, and look more closely at its goals for market diversification and cost position improvement for 2010.
Founding and phosphate with Foskor
In founding Foskor, the IDC worked to support the fertiliser and farming industry and society in South Africa, both of which rely on phosphate. Horn says that if you look at the overall industry, there are very few privately-owned phosphate operations in the world.
“Most of them are government-owned or very heavily government-supported. That’s the same in South Africa. The phosphate mining industry has been started by the South African government,” he continues. “It has been so until 2006 when we sold 2.5 per cent of the business to an Indian based company called Coromandel Fertilisers Limited. We also then entered into a business assistance agreement with them whereby they assist us to improve the business and then from the improvements they are allowed to acquire additional shareholding.”
Today, Coromandel is a 15 per cent shareholder in Foskor and in 2008 the companies converted their business assistance agreement into a technical assistance agreement. Now Coromandel assists Foskor in terms of technical matters, no longer only on the business side.
“There is also a process underway of further bringing in Black Economic Empowerment partners, as well as facilitating shareholding to the community in which we operate, and to the employees,” Horn says. “It’s finalised, it’s just not implemented. We’re in the process of implementation.”
During 2009, as the company moved to strengthen its shareholder base and dealings with those relevant parties, the mine site saw some equally vital, and frankly very impressive, changes.
From “earthmoving” to “mining”—stockpiles to “hard rock open cast mining” Horn says that up until 2009, Foskor took around 50 per cent of its phosphate production from above ground stockpiles. Doing so was economical and much easier operationally, with these resources having been partially mined and processed by our neighbouring company (Palabora Mining Company) for the last 50 years.
“It’s obviously always cheaper to process above ground stockpiles because you’ve already incurred in the past the drilling and blasting costs. It’s always been cheaper to process that material which was stockpiled at a much greater rate than the processing could happen,” Horn explains.
“These stockpiles came to a point where they were going to be depleted, and Foskor had to change over from processing above ground stockpiles to mining and processing hard ore from a new mining operation or a new pit.”
In doing this, Foskor was faced with the monumental task of meeting circa 50 per cent of the material required to feed its plant, and Horn explains that in South Africa, as is commonly the norm the world over, opening up a new pit involves a lengthy process of obtaining licenses, approvals, mining rights and so forth.
“We were successful in obtaining those mining rights and approvals and we had our first blast in the south pit on 22 September 2009, which allowed us now to start the other preparation of that pit in order for us to mine material from that pit as of April 1, 2010,” he says.
“We have now fully-converted all of plants to be fed from the south pit. The phosphate beneficiation plant has four production streams, of which two streams are fed from the northern pyroxenite pit, and two production streams are now being fed from the southern pit, compared to above ground stockpiles in the past.”
The Southern pit is situated about 4.5 kilometres further than the northern operations, which presented Foskor with the choice to truck material from the south pit using dumpers or to install a crusher and an overland conveyor to move the south pit material to the plant.
“If you recall in 2008 we had the big scare in the mining industry with the shortage of tires, and also the price of diesel in South Africa is also a significant part of our production cost,” Horn says.
“We then decided to install a primary crusher very close to the new pit, and a 4.5 kilometre overland conveyor all the way from the pit to the plant operations in order to reduce our reliance on fuel and trucks and tires, and also to further reduce our environmental footprint.”
With the above ground stockpile dependency thwarted, and new mining rights signed, sealed and delivered, Foskor is in as enviable and promising a position as ever.
Foskor continues to grow
The company has clearly and quickly demonstrated its capacity for growth, development and overcoming such unavoidable obstacles as switching sources for 50 per cent of its product, so what comes next? For the Foskor Group, the strategic goal is diversification of its markets and products and to improve its position of the cost curve.
“We need to reduce reliance that the group has on the markets in India, and we also need to diversify our products. We only produce phosphate rock concentrate, phosphoric acid and also granular fertilizer (DAP & MAP) and we need to diversify that product range further down the value chain,” Horn explains.
“That is the key objective for this year. If you look at last year’s performance there’s a huge decrease compared to the 2009 year because of global economic conditions and the crash in commodity prices.”
In light of the global financial crisis and the common hardship many miners suffered in the last financial year, Foskor is determined to bounce back quickly and return delivering the impressive sorts of year-on-year results it is famed for.
“Obviously our second objective for next year is to improve our cost base and improve our cost position, so there’s going to be significant work on our cost structures as well,” Horn adds. “It won’t be anything crazy, we’ll be very responsible in everything we do and it won’t have any significant structural changes. We just need to keep focused.”
Focus is certainly a quality which Foskor has in droves. The company’s history of growth speaks for itself, and the turnaround in sourcing circa 50 per cent of its material to feed the plant only serves to demonstrate that this company is still very capable. It seems like no challenge comes without a solution for Foskor. This is a company focused on finding a way around and above any obstacle.
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