Fortune Favours The Brave

The onset and spread of the COVID-19 pandemic was so swift and surprising that business strategies, scheduled mergers, acquisitions and product launches took a back seat as companies grappled with the impact of lockdowns and keeping employees safe. Few companies were bold enough to go ahead with intended business plans.

Global explosives manufacturer AECI Mining Explosives defied the odds, taking the courageous step to bed down on its recently acquired Brazilian acquisition, and launched an innovative new product, the Powergel X².

AECI Mining Explosives MD Edwin Ludick is however quick to point out that these activities were done within controlled parameters and within the guidelines set out in terms of lockdown regulations.

In line with its geographical expansion focus, AECI acquired an explosives business in the Brazilian state of São Paulo in 2018. Following the transfer of all operating licences to the AECI Group at the end of February 2020, the company began bedding down on the acquisition, which includes ownership of a bulk emulsion and packaged explosives manufacturing plant as well as distribution and storage facilities. The Lorena facilities currently serve mainly the Brazilian construction and civil blasting industry with exposure to the large mining sector. AECI Mining Explosives is looking to unlock opportunities in mining by leveraging the group’s experience in underground and surface mining.

New product launch

Following the market’s requirement to find a solution for blasting in unstable conditions, AECI Mining Explosives developed and launched its latest bulk emulsion offering, Powergel X². This product is designed for surface mining applications where extreme blasting conditions such as hot holes and reactive ground, or a combination of both, exist. The product is differentiated by the fact that most competitor products available on the market cater for either reactive ground or hot holes, but not both.

Impact of COVID-19

While the pandemic has devastated the local economy, the mining sector overall performed better than many sectors. The majority of commodities were under pressure, barring gold.

Given that the coal industry is a key component to keeping the lights on, AECI Mining Explosives’ business was kept ticking.

“Following the onset of the pandemic, the AECI Group took swift and strategic measures to ensure that we drove safety at our operations, paid employees full salaries and kept our teams intact without turning to retrenchments,” says Ludick.

The company was quick to set up a health and safety task team, which included key medical personnel and outlined policies and guidelines that carved a way forward for the company and its employees.

Given the restrictions placed on international travel, the company’s ability to scope and target new areas of growth in the US had been limited, as was the scheduled grand opening of AECI’s new facility in Brazil.

“Owing to the pandemic, the grand opening of the factory – which was scheduled for April – had to be postponed,” says Ludick.

Lessons from the pandemic

The pandemic has heightened the need for implementing greater safety and cleanliness measures. “Although the scheduling of product delivery has impacted business, this new normal has made way for closer relationships with our customers.”

Going forward, these measures will continue to underpin the way in which businesses operate, especially in terms of sanitising.

“Furthermore, the pandemic has reiterated the long-held belief that cash is king. Companies that were highly geared towards debt have been the earliest casualties of the pandemic. Going forward, companies will be focused on ensuring that they remain in a strong cash position. For AECI, which is responsibly geared, this is a clear reminder to continue to remain so.”

The pandemic also fast-tracked the move to digitalisation with more people turning to digital platforms, which helped companies keep people operating in safer working environments.

“In fact, we held our first Teams farewell for one of our executives in the Mining Chemicals business – Liesl de Villiers. Although this has been a novel way to send off our colleague, we managed to successfully deliver a full programme, including speeches. Digitalisation has certainly paved the way for doing business differently and more safely.”

2021 – the year ahead

Given that there are no established models of growth for 2021, Ludick expects that it will be “a combination of growth that was expected between 2019 and 2020 and possible curtailment due to slower recovery” – this as the second wave of the pandemic takes hold of key global markets. If we are able to recover to the original 2020 expectation, the world economies would have done well.

“The impact of the second wave will be less severe as measures have already been implemented in the first round of the pandemic,” he says.

For the year ahead, AECI Mining Explosives is looking to continue driving its growth strategy; targeting territorial expansion, which entails scouring the markets for new areas of opportunity, including growth nodes in Africa, Australia, South America and tracking the North American market.

According to Ludick, South America offers extensive opportunity and a chance to expand its footprint into the Chilean and Peruvian markets, as they offer untapped growth potential. They will also be looking to leverage off their strong presence in Africa, continuing to identify areas for opportunity, especially those in Central Africa and gold-rich West African destinations.

“In Africa, we adopt our successful hub and spoke method, whereby we establish a presence in a particular area and from there we scan neighbouring countries for opportunities.”

The explosives manufacturer plans to either “put up emulsion plants or acquire established facilities” in identified growth nodes.

“In 2021, we will continue to participate in tender processes, competing with the best in the industry as well as target acquisitive growth, especially opportunities that are a good fit with our strategy and which can deliver good returns on investment.”