The State-owned Industrial Development Corporation (IDC) slumped to a R4.7-billion loss for its 2025/26 financial year from a profit of R329-million on the back of losses reported by associate companies and subsidiaries, notably Foskor.

The phosphate rock miner and fertiliser producer’s Richards Bay acid plant was placed into care and maintenance during the year after the supply of sulphur and ammonia, which are key inputs, was heavily disrupted by developments linked to the US/Israel war on Iran.

The prices of sulphur and ammonia have also reportedly tripled since the start of the war, making the resumption of production commercially unviable.

Foskor’s operations had already been impacted prior to the closure of the Strait of Hormuz by two fatalities and mine flooding; incidents that resulted in the suspension of operations for a number of weeks.

The company’s operational losses were recorded at R1.2-billion, but the IDC also reversed a deferred tax benefit of R1.6-billion on uncertainty over whether it would be realised in the coming five years.

IDC CEO Mmakgoshi Lekhethe confirmed with Engineering News that initiatives were under way to source the raw materials needed to resume production at Richards Bay ahead of the key October planting season in South Africa.

However, she also said that Foskor’s production costs remained elevated and confirmed that the company would continue to negatively affect the IDC’s 2026/27 financial results.

“Foskor needs to look at a turnaround strategy that positions it for the future,” she said, describing its prevailing cost base as too high even though the company had been identified as a “strategic” asset to the country.

The IDC’s loss was further accentuated last year by developments at the Mozal aluminium smelter, in Mozambique, which also entered care and maintenance during the period.

The development financier has a 32% stake in the smelter and recorded an equity accounting loss of R2.6-billion on that position in the year to March 31, 2026.

At a company level, where the results of subsidiaries and associates are not included, the IDC reported a R2.3-billion profit, an improvement on R1.8-billion reported in the previous financial year.

CFO Isaac Malevu argued that the IDC funding model remained resilient, despite economic headwinds, pointing to an improved debt-to-equity ratio of 47.7% and a reduction in nonperforming loans to 35.1%, a figure that remains worryingly high.

He said overall nonperforming loans in value have declined by R11-billion from R35-billion in March 2022, but described the top five as remaining “sticky”, while also making up more than 50%, or R12.4-billion, of all nonperforming loans.

Lekhethe said the reduction in nonperforming loans remained a top priority for the executive and the board for the remainder of the current financial year.

“If we can remove at least one or two of the top five, our nonperforming loans go down a lot, our impairments go down, and that releases capacity on our balance sheet for us to do more,” she said.

The IDC expects to match its 2025/26 disbursements of R17-billion in the current year, but the figure could be elevated by some large transactions under consideration, including a possible purchase of steel producer ArcelorMittal South Africa, which is trading under a cautionary.

Over the coming five-year period, the IDC is budgeting total disbursements of R56-billion to traditional sectors, as well as the priority sectors of critical minerals, green industries, grid infrastructure, defence-related manufacturing and the blue economy.