| Mon 18 Apr 2005, 11:22 | | AEL is knocking on China's door |
|
AEL is knocking on China`s door
April 18, 2005
By Ingrid Salgado
AEL, the AECI mining solutions subsidiary that dominates the African explosives market, was eyeing extensive opportunities in key global mining economies, the company said on Friday. China, with a market potentially worth $700 million (R4.4 billion), was at the top of AEL`s list, and two employees were now based there. AEL had also visited India, Kazakhstan, eastern Europe and north Africa to evaluate prospects. AEL`s international footprint has already started opening up through its 50:50 electronic detonator joint venture with Dyno Nobel, DetNet, which started selling into global markets in January `The market right now is pulling harder than we can satisfy` . AEL managing director Graham Edwards said DetNet`s top-line business was expected to grow to about $100 million a year within five years, with profit accruing to AEL of about $10 million a year. The joint venture would be earnings positive from next year. Global demand for electronic initiation systems was high. `The market right now is pulling harder than we can satisfy,` said Tiff Whitehouse, the chief executive of DetNet. While Dyno Nobel gives DetNet access to operations in 35 countries, AEL has contributed the technology for electronic initiation systems as well as distribution channels in Africa. DetNet sold more than 600 000 units, worth about R45 million, on the continent last year. AEL`s interest in penetrating China comes as the company prepares for a second round of fighting cheap Chinese imports of shock tubes and capped fuses. Edwards said AEL had again petitioned the International Trade Administration Commission to address dumping and to ensure fair trade conditions. The commission turned down AEL`s dumping application last year, ruling that it had not demonstrated material damage. But Edwards said the company`s estimated 60 percent market share in southern Africa had been influenced by the Chinese imports. AEL had responded to the threat with a product development initiative to ensure that its shock tubes competed directly with the Chinese products. AEL`s prices were, however, about 15 percent higher. `They sell products distinctly cheaper than us, but there is a big question mark over their quality,` Edwards said. AEL is AECI`s second-biggest division after speciality chemicals, and contributed R212 million, or 29 percent, to the holding company`s trading profit in the year to December. AECI shares lost 2c to R40 on the JSE Securities Exchange on Friday, while the chemicals sector fell 0.21 percent.
