In September 2018 AECI acquired an explosives business near Lorena, in the Brazilian state of São Paulo, for a cash consideration of US$6.3-million.
The transaction was realised through a judicial recovery (business rescue) process and was conditional on certain precedent conditions being fulfilled. One such condition was the transfer of all operating licences to the AECI Group. The transfer was completed at end-February 2020 and the business is now being operated by the Group.
The US$6.3-million consideration is expected to be settled by 30 June 2020.
The acquisition, from Brazil’s Dinacon, includes 100% ownership of a bulk emulsion and packaged explosives manufacturing plant, together with the explosives operating licences, as well as distribution and storage facilities. It is the first of its kind for AECI in Latin America (LatAm) and is a good growth platform for the Group’s Mining business into the rest of LatAm. This is in line with AECI’s intent to continue expanding the geographic footprint of its Mining strategic growth pillar.
The Lorena facilities currently serve mainly the Brazilian construction and civil blasting industry and has had limited exposure to the large mining sector. Under AECI’s ownership there are significant opportunities to grow the business by leveraging the Group’s experience in underground and surface mining, as well as its relationships with global mining customers.
AECI already has a presence in LatAm, where the key focus to date has been on mining chemicals and plant health solutions for those markets. The acquisition of the explosives business represents a step-change in the Group’s investment in the region.