AECI’s name — African Explosives & Chemical Industries — offers a straightforward description of the company’s core business, though the “African” part is now somewhat outdated given that its operations span six continents.
That global footprint, combined with its position as the continent’s leading supplier of mining explosives, should be a major strength. Yet the share price has languished over the past decade, weighed down by underperforming acquisitions and persistent operational inefficiencies. More recently, however, AECI has found renewed favour among South African fund managers, thanks to a sweeping turnaround effort led by new CEO Holger Riemensperger. Over the past two years, his management team has executed a comprehensive restructuring strategy that is finally starting to bear fruit. Riemensperger believes the group is now beyond the halfway mark in its transformation — and if recent numbers are anything to go by, the worst may be over.
Part of what makes AECI’s core mining business so compelling is its complexity. The manufacture of mining explosives is a high-stakes, technically demanding process that requires precise chemical formulations, sophisticated process controls and strict regulatory compliance to ensure consistent performance across a wide range of mining environments. Handling volatile materials also demands advanced automation, rigorous safety protocols and deep institutional expertise to mitigate risk. With a history spanning more than a century, AECI has built a competitive moat through proprietary technical knowledge, entrenched infrastructure, long-standing relationships with major mining houses, and a strong safety and compliance record — particularly important in the demanding environments of Africa.
That deep capability is now being leveraged to deliver on AECI’s globalisation strategy. The group is expanding organically in Australia, where it grew its explosives business by double digits in 2024. In Asia-Pacific, a new plant in Papua New Guinea is set to bolster growth across the region. In Latin America, the company is gaining early traction in Brazil, Chile and Peru through exports and incremental market share gains. Meanwhile, in Europe, the Wolfenbüttel plant in Germany — originally part of the underperforming Schirm acquisition — has been repurposed to produce mining chemicals for international markets.
This global thrust has materially shifted the group’s earnings base. Today, about two-thirds of AECI’s earnings before interest, taxes, depreciation and amortisation (ebitda) comes from outside South Africa, with the DRC, Ghana, Zambia, Indonesia, Australia and Botswana collectively accounting for 95% of its mining explosives division. That diversification has become a critical advantage, as the South African operating environment remains fraught with challenges.
In the first half of 2025 alone, AECI’s Modderfontein site — described by management as the “heart and soul” of its local operations — was hit by 16 power outages. “A five-second outage can knock production for 24-48 hours,” says Riemensperger, highlighting not only the lost output but the additional wear on equipment and extended ramp-up times.
Compounding the disruption was the failure of South Africa’s sole producers of ammonia and lead azide — presumed to be Sasol and Denel respectively — to fully meet AECI’s feedstock requirements. With no local redundancy, the company was forced to import ammonia at higher cost, while lead azide shortages led to a force majeure declaration on one local contract. These setbacks also diverted technical staff away from executing planned capex projects, delaying key initiatives and slowing the overall transformation timeline.
Compounding these issues were elevated credit losses — mainly from three South African customers — in the company’s chemical segment. This business is heavily exposed to the country’s embattled manufacturing sector, which may face further headwinds from the Trump administration’s new tariff regime. “In the mining business, we don’t expect any material impact from the tariffs,” says Riemensperger. “But the chemicals side, which supplies South African manufacturing, could suffer indirect effects, particularly if automotive demand weakens.” On a more positive note, the platinum group metals (PGM) sector, another key customer of the chemicals business, has had a recent price rebound — potentially offering some near-term uplift.
Despite its domestic hurdles, AECI’s core mining segment, which makes up 95% of group profits, remains the company’s growth engine
Despite its domestic hurdles, AECI’s core mining segment, which makes up 95% of group profits, remains the company’s growth engine. “Mining is a technology business,” says the CEO, highlighting investments in automation, digital tools and AI.
The financial results for the first half of 2025 suggest that AECI is finally beginning to unlock value. Headline earnings a share jumped 132% year-on-year, with ebitda rising 24% despite the South African setbacks. Annualised HEPS is now about R12 a share, placing AECI on a forward p:e of just 9 — undemanding for a business with the ambition to be one of the top three mining suppliers worldwide. The current ebitda run rate stands at R3.2bn, against a medium-term target of R5.6bn-R6.3bn by the end of 2026.
One caveat is the broader mining investment cycle: while no pullback is expected, a significant slowdown in global mining capex could slow AECI’s growth trajectory.
Much of this momentum stems from the group’s disciplined capital allocation and streamlining efforts. AECI is exiting non-core businesses and returning to its roots. The closures and disposals of Much Asphalt, the Food & Beverage business and parts of Schirm in Germany and the US, have already netted about R2.4bn. The remaining disposals — including Public Water and Sans Fibers in the US — should bring the company within reach of its R3bn-R4bn divestment target. “We’re not selling because these are bad businesses,” says Riemensperger. “We’re selling because they’re not core to our strategy.” Once those sales are complete, AECI will have fully exited the US chemicals market, which had been an expensive foray with limited strategic value.
The proceeds have already had an impact. Net debt to ebitda has dropped from 1.6 in 2024 to just 0.9. And though the 100c a share interim dividend may be modest, it signals that management is confident about the direction of travel. “We promised to continue paying dividends through the transformation,” says Riemensperger. “We’re keeping that promise.”
CFO Ian Kramer, who joined recently, emphasises the importance of improving financial controls and systems, especially around credit risk. “The issues in the chemicals division are isolated to three clients,” he notes. “But we’re strengthening our oversight regardless.” Kramer also reiterates the impact of the Modderfontein supply challenges on capex execution. “We couldn’t pull back on capex as much as we’d planned,” he says, “because the same technical teams had to be redirected to resolve those operational issues.”
The outlook for the second half of 2025 is encouraging. Historically, AECI’s second half is stronger, driven by seasonal upticks in agriculture and mining activity. With the power and supply issues at Modderfontein now largely resolved, the company expects a recovery in local production and margin normalisation. “We haven’t lost any contracts,” says Riemensperger. “Once we can supply again, the profits will come back.”
At the same time, AECI is carefully eyeing international expansion opportunities, particularly in mining services across Asia-Pacific, Australia and Africa. While inorganic growth remains on the radar, Riemensperger is quick to acknowledge the company’s mixed acquisition history. “We’re not there yet,” he says. “But we are screening the market. If and when we find the right opportunity, we’ll move — but only with caution.” Given the progress under his leadership, investors are likely to give him the benefit of the doubt.
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