Explosives manufacturer AEL Intelligent Blasting’s global growth strategy, which is underpinned by its African profitability, is targeting entry into at least five or six new markets by 2022, says divisional director Meagan van den Berg.
“More than half of our business is dollar-based and a significant chunk of that sits in Africa.” The South African-domiciled company, while dealing with tough market conditions in the country, has been able to benefit from the improved mining sentiment in its international operations. AEL recently kicked off its expansion drive with the acquisition of Brazilian explosives manufacturer Dinacon. The acquisition includes an emulsion-manufacturing plant and provides AEL with an established footprint from which to grow.
The agreement is AEL’s entry vehicle into Latin America; in particular, Brazil, Peru and Chile.
“This global expansion drive remains critical for ensuring future sustainability for AEL and while the acquisition guarantees us a presence in the country, more importantly it gives us the opportunity to expand our footprint into neighbouring countries,” says Van den Berg.
AEL’s expansion strategy is based on the hub and spoke methodology which entails scouting new markets, setting up shop and establishing distribution channels. This method encompasses the use of modular plants that are easy to set up and allows for speedy production ramp-up.
From a socio-economic perspective, AEL’s preference is for in-country manufacturing which aims to ensure security of supply for customers (over an import model) while providing local employment and skills transfer in host countries.
This strategy has already shown benefits as AEL started operating in Indonesia in 2009 and entered the Australian market in 2015. The ability to rapidly deploy in these markets and offer service of high quality has secured future growth in these regions.
AEL’s global performance in 2019 has been bolstered by the upturn in commodity prices, with most regions in which the company operates benefiting from the upside and subsequently achieving increased production output.
However, countries facing political or economic uncertainty, such as South Africa and Zimbabwe, did not fully realise the benefits of the upturn, explains Van den Berg.
Although the basket prices for platinum group metals and gold have improved significantly, South Africa’s underground mines continued to face high input costs and labour unrest.
“The underground mining market in South Africa has always been very attractive to AEL because of the high volumes. Earlier this year, AEL launched a new strategy to better service our underground customers. We changed many of our pricing mechanisms and service models and looked at how best to improve the market sustainably. AEL has always offered the latest technology as well as good product and services and these new service models enable our customers to better access AEL’s offerings. Although the underground market in South Africa remains volatile and a challenge, local mining houses have recognised the benefit of supporting local suppliers,” states Van den Berg.
“Apart from investigating opportunities elsewhere on the continent, it has become important for AEL to diversify our exposure to commodities. Where in the past we were highly exposed to gold, platinum and coal, following our recent expansion into Africa, we have managed to diversify our exposure by including commodities such as copper into our portfolio,” notes Van den Berg.
Global trends influencing the explosives market
Key trends influencing the market include customers’ calls for customisation, innovation and technology-driven value add.
“Customers are no longer interested in a one-size-fits-all approach; instead they are looking for a supplier that understands their needs and for the development of customised products and services particular to their requirements.”
Secondly, the market is calling on service providers to incorporate innovation and technology into all aspects of the mining cycle so as to improve safety, production and efficiencies.
“New technologies make it possible for the development of products that offer new capabilities and disrupt existing practices to aid the mining industry. It is about doing things more safely and efficiently and demonstrating the intelligence which goes into every blast,” says Van den Berg.
Well worth noting is AEL’s new technology-driven expansion – the commissioning of the deepest vertical drop installation in the world at a site in Zambia. The 900m vertical drop enables emulsion explosive precursors to be delivered from the surface to underground workings without additional transfer cassettes or transfer mechanisms, thereby improving logistics, handling, storage and control.
The project, scheduled for official launch by the second quarter of 2020, is the fourth such project to be rolled out by the explosives manufacturer.
“AEL rolled out three vertical drop installations in South Africa – two at Sibanye-Stillwater’s Bathopele platinum mine, in Rustenburg, and the other at Anglo American’s Unki platinum mine in Zimbabwe.”
Moreover, AEL is investigating the opportunities presented by virtual reality to enhance its training and skills development. “It is anticipated that the implementation of virtual reality, next year, will enable training to be consistent across the globe while providing users with a real-life experience that better prepares them and enhances their own capabilities. We will also look to expand our incorporation of nano technologies to all product streams as it improves the quality, robustness and performance of products,” says Van den Berg.
Thirdly, host countries are calling for greater engagement and value addition to mining projects, as aligned to socio-economic requirements.
“Aside from a focus on upskilling local citizens, we offer innovative solutions through our AECI sister companies, for example for water purification and agriculture.”
AEL also remains focused on responsible mining and continues to look at various opportunities to reduce the carbon footprint of its operations and associated activities.
“Sustainability has a twofold influence on our way of thinking – firstly we look for ways in which to reduce our own impact on the environment and secondly, the impact of our products used during their application at the customer sites.”
Initiatives under way include the use of used oil emulsion explosives which have been introduced to South Africa, Indonesia, Botswana, Zambia and the Democratic Republic of the Congo. The product employs used/waste oil from a customer’s site in the emulsion manufacturing process. “This has proved to be an environmentally friendly and cost-effective way to dispose of waste oil and prevent its release into the environment.”