Jul 26, 2011
AECI eyes bigger move into Brazil, also keen on Nigeria expansionBack
Engineering|Gold|AEL|AEL Mining Services|Ael-mining-services|Africa|Copper|Environment|Explosives|Fire|Industrial|Mining|Platinum|Africa|Building|Explosives|Manufacturing|Oil And Gas|Products|Services|Diamonds|Operations
© Reuse this
In an interview with Engineering News Online, he said that acquisitions worth about $150-million "may be" in the pipeline in Brazil’s chemical sector in the future. “We have been in Brazil in the past four years, have learnt lessons and are at a point where we believe we can now make a bigger move into Brazil.”
But, Edwards described a move into Brazil as “opportunistic” in nature, as most of the businesses were fully priced, and as such, any strategic move required a business model that would add value.
The company is also focused on expanding into Africa, where Edwards identified significant opportunities to grow and develop the chemical business, particularly in the oil and gas rich nation of Nigeria.
“Nigeria has a growing middle class and a robust economy – there can be opportunities for us to grow by acquisition.”
The JSE-listed group delivered a stronger performance in the first six months of the year, despite volatile trading conditions in both the mining and manufacturing sectors. AECI posted headline earnings of R284-million, an 11% improvement from the corresponding period of 2010, and profit from operations was 13% higher at R546-million.
Assisted by global increases in commodity prices but tempered by the continued strength of the rand, which averaged R6.88/$ in the half-year, revenue from continuing operations increased by 10% to R5.97-billion.
The strength of the rand continued to be a challenge for customers, but AECI said it would continue to be cost effective as it competes against imported products.
“We believe in ramping up plants and getting margins through, the rest of the business can remain stable with underlying growth from the new plants,” Edwards explained.
With regard to mining, CFO Mark Kathan said the company expected growth across all regions, with commodity demand remaining sound in both industrial and investment sectors.
AEL Mining Services MD Tobie Louw indicated that the competitive mining market would remain challenging, but pricing would remain soft, with deep level mining volumes to remain under pressure.
But, despite the continued decline in South African deep level mining, AEL Mining Services experienced strong growth in the surface and massive businesses servicing the platinum, diamonds and chrome mining sectors.
AEL’s revenue was 11% higher than 2010 at R2.54-billion, driven by a 16% escalation in ammonia prices, which also resulted in higher working capital levels. Overall volumes grew by 2.5%, and profit from operations improved by 8% to R200-million.
“The mining services environment has become more competitive and a substantial portion of AEL’s business was subjected to tender processes in the half year,” the company said.
However, AEL said it was able to retain more than 90% of its business and the market share changes did not impact performance for the period.
In the rest of Africa, good growth was delivered by the copper mining sector in Central Africa and diamond mining in Botswana continued to perform creditably, the company said. But, the contribution from gold mining in West and East Africa remained flat.
Meanwhile, the higher demand for shock tube, the building of inventories and fire on a conventional plant has slightly delayed the processes for retrenchment of employees from conventional shock tube manufacturing facilities.
Edwards described growth in South Africa’s manufacturing sector as sluggish, but positive. While the company expected its operational performance in the second half of the year to be [historically] better than
the first quarter, it said results could be affected by the current labour unrest and tightening of market conditions.
Meanwhile, the company entered into a R1.2-billion broad based black economic-empowerment (BBBEE) transaction comprising permanent employees and a community trust that would fund educational and developmental initiatives.
The JSE-listed group, which delivered a stronger performance in the first six months of the year, said on Tuesday the BBBEE transaction would advance its empowerment aim of increasing black participation by a broad spread of South Africans.
The deal, which takes AECI’s BBBEE equity ownership up to 27.4% with regard to the BBBEE Codes of Good Practice, will have a maximum term of ten years and participants will receive a dividend from the first year.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Updated 4 hours ago Transport equipment manufacturer GE Transportation has appointed Thomas Konditi as the head of its sub-Saharan Africa division. Konditi, who would be based in Johannesburg, was most recently COO of GE Africa, in Nairobi. His responsibilities included the oversight of...
Updated 5 hours ago Trade union Solidarity has criticised the Nuclear Energy Corporation of South Africa (Necsa) for continuing with a restructuring process, which the union claims results in employees being demoted, without consulting with Solidarity about the process. Solidarity...
Updated 5 hours ago As Proudly South Africa (SA) moves to encourage local procurement to bolster small and medium-sized enterprises (SMEs), the newly established Department of Small Business Development (DSBD) aims to boost these enterprises’ contribution to gross domestic product (GDP)...
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
This Week's Magazine
Updated 5 hours ago Eqstra Holdings was going to reduce its exposure to contract mining, but it was not yet ready to sell the troubled business, said CEO Walter Hill on Tuesday. He said Eqstra would not sell its contract mining business in a “depressed market”. He said it would be...
Subscribe to Engineering News and Mining Weekly for two years, but only pay for the first year. The weekly editions of Engineering News and Mining Weekly will be posted to your preferred postal address and also gain access to:
National flag carrier South African Airways (SAA) is in an advanced stage of renegotiating its deal with European airliner manufacturer Airbus to acquire A320 single-aisle (or narrow body) aircraft. The aim is to replace ten of the aircraft still on order with five...
Worldwide, the main thrust in the ports industry over the past decade or more has been to increase efficiency. Traditionally, ports have been run by engineers and mariners and, in the past, increasing a port’s capacity was achieved by expanding the harbour. “That has...
What do you do when an elephant has a toothache? You call Dr Gerhard Steenkamp from the University of Pretoria’s (UP’s) faculty of veterinary science, Onderstepoort, one of only two elephant ‘dentists’ in the world.