Diversified chemicals group AECI says it has bagged a five-year contract to supply explosives and provide services to Newcrest Mining’s Lihir gold mining operation in Papua New Guinea.
The deal comes as the R12bn JSE-listed group, which is reviewing its operations to design a new growth strategy that it will unveil in November, is tackling the lowering of its R5.7bn debt pile.
The move to provide services and products to one of the world’s largest open-pit gold mines, which is owned by Newcrest, the largest listed gold producer on the Australian Securities Exchange, is expected to boost AECI’s mining division in maintaining its market share growth in the competitive Asia Pacific region.
This is after it reported “pleasing momentum” in the division for the five months to the end of May, which resulted in an improvement in overall sales volumes and margins as it saw further market share gains in SA, Central Africa, East Africa and the Asia Pacific region.
“The Newcrest Lihir contract not only further expands our reach in the greater Asia Pacific region but is a significant milestone on our journey to sustainable international business growth,” AECI CEO Holger Riemensperger said.
As a result of the contract being awarded to do work on Lihir, the company said a new AECI group entity called AECI PNG was expected to be registered.
Operating business segments include mining, water, agri health and chemicals. The group’s business outside SA generates more than two-thirds of revenue with mining accounting for the lion’s share.
AECI mining CEO Mark Kathan said the contract included the construction of a modular emulsion plant on the Papua New Guinea island of Lihir. “This will enable us to deliver full blasting services using our specially formulated hot and reactive ground bulk products, as well as our specially designed delivery systems and hot hole initiation systems,” he said.
The Johannesburg-based group said construction of the plant was expected to take six months and it would be in full production in May 2024.
Founded in 1896 to service SA’s gold and diamond mining industries, AECI was listed on the JSE in 1966 and now operates in 22 countries. Its products and services include chemical raw materials, water treatment solutions, asphalt and bitumen for road construction, and food and beverage ingredients and commodities.
After its mining segment delivered a record first-half performance in 2023, AECI has been upbeat on its outlook for the mining division and highlighted a “good pipeline of new tender opportunities internationally”.
AECI’s shares price was down 1.13% to R113.31 on Thursday.
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