Explosives and mining chemicals group AECI is moving to secure green ammonia for use in the production of lower-carbon explosives, demand for which is expected to grow in some of the mining jurisdictions the JSE-listed company is specifically targeting as part of an ambitious internationalisation strategy. 

The company is at the early stages of implementing a far-reaching restructuring plan aimed at expanding and globalising its core explosives and mining chemicals units, while also disposing of its noncore chemicals businesses for potential proceeds of between R3-billion and R4-billion.

The restructuring is being pursued in a bid to double profitability to R6.4-billion by 2026, against earnings before interest, taxes, depreciation and amortisation of R3.2-billion reported in 2022, while attaining a top-three global-mining-market position by 2030.

CEO Holger Riemensperger tells Engineering News & Mining Weekly the market for so-called green explosives is being driven by a number of its mining customers, especially those located in Australia and Europe, which are prepared to pay an initial premium for low-carbon explosives.

That said, he believes green ammonia-based explosives will become cost competitive given that they will be produced using renewable electricity sources, the cost of which continues to decline.

Producing green ammonia requires green hydrogen made by splitting water into oxygen and hydrogen in an electrolyser using renewable electricity, as well as nitrogen separated from the air.

Demand for green explosives is also expected to grow in North America, where AECI is aiming to establish a foothold in the not-too-distant future through a combination of organic and acquisitive growth.

Riemensperger stressed, however, that acquisitions would be pursued more aggressively only once proceeds from the sale of businesses had been secured and the company’s gearing had been reduced to about 30%.

AECI has signed a non-disclosure agreement with a partner in South Africa for the potential long-term supply of green ammonia from a project that is expected to be commissioned in 2027/28.

Riemensperger refused to be drawn on the identity of the partner or the location of the project, confirming only that AECI would not be making any upfront investments and had no intention of integrating backwardly into ammonia production.

The group was eager, nevertheless, to continue diversifying its sources of supply in South Africa through imports, as well as to begin integrating green ammonia into its supply chains.

He described the green ammonia project as being at an early stage and said the developers were keen to conclude significant offtake agreements to help improve the project’s commercial prospects of proceeding.

Meanwhile, the internationalisation of AECI was starting to gain momentum, underpinned by a desire to align the business geographically with those countries poised to be large producers of critical minerals such as copper, lithium, cobalt and nickel.

These markets included Argentina, Australia, Chile, Cuba, the Democratic Republic of Congo, Indonesia, Peru and the group’s home market of South Africa, where it was the market leader but where demand was weak.

AECI was also following customer demand in the rest of Africa, South America, North America, the Asia Pacific region and Europe, where it is ramping up a repurposed Wolfenbüttel plant to produce mining chemicals.

To support the growth into new markets, the group also recently appointed Stuart Miller, who will take up the role of executive VP for mining in mid-September, having previously worked for explosive group Orica.