Omnia files contempt of court case at Foskor over contentious phosphoric acid pricing

8th December 2017 By: Dylan Slater - Creamer Media Staff Writer and Photographer

JOHANNESBURG (miningweekly.com) – Diversified chemicals producer Omnia has filed a contempt of court case against phosphates and phosphoric acid producer Foskor over the alleged breaching of a court order by the Competition Tribunal.

Omnia filed the urgent application in the Pretoria High Court to have Foskor and its directors declared in contempt of court, following Foskor’s failure to adhere to an order of the Competition Tribunal, which restricted its pricing of phosphoric acid to the local market since mid-2014.

Omnia currently sources all its phosphoric acid from Foskor, the sole South African supplier. Foskor also controls the only import facility of the chemical, situated at Richards Bay.

Phosphoric acid and its phosphate derivatives are required as raw materials for local fertiliser producers and animal feed suppliers.

The Competition Tribunal initially made an order in 2010 confirming that Foskor had engaged in excessive pricing, which contravened the Competition Act. The tribunal ruled that Foskor could not charge more than the free-on-board (FoB) Richards Bay price for phosphoric acid.

However, Foskor began to charge more than the FoB price from mid-2014 onwards, which is why Omnia applied to the High Court to enforce the tribunal’s order. The court ruled in favour of Omnia. Foskor then appealed the decision in March 2016, which was subsequently dismissed last month.

Despite a clear order confirming that Foskor is not permitted to charge local customers more than the FoB Richards Bay price for phosphoric acid, Foskor has insisted that it will not supply Omnia with phosphoric acid if it seeks to reserve its rights when paying the higher price demanded by Foskor, or if Omnia pays the higher price under protest.

Omnia CEO Adriaan de Lange said Foskor has “intentionally and unlawfully” flouted the order of the High Court to the detriment of the country and its people.

He further noted that the Industrial Development Corporation is a major shareholder of Foskor, and that South African farmers rely on Foskor’s business for the local supply of an essential nutrient. “It is therefore quite extraordinary that Foskor is refusing to supply local fertiliser producers and animal feed suppliers with this essential product during the primary agricultural growing period.”
 
De Lange added that Foskor’s inflated pricing at this “critical planting time following the first summer rains”, endangers the food supply chain of South Africa, and can only be regarded as “unacceptable and highly irresponsible”.

Creamer Media approached Foskor in terms of their right to respond, but failed to respond to an email and telephone call attempts.