Improved mining activity, plus the potential for further expansion of the industry, has not only allowed AEL to achieve encouraging results in West Africa, but is also offering promising new opportunities.
“Apart from our thriving business bases in Ghana and Mali,” says AEL’s international business director, Stuart Wade, “the company is involved in new and existing ventures in Guinea, Burkina Faso, Niger and Sierra Leone.”
“The overall performance of African Explosives (Ghana) Limited (AEGL) in 2005 was excellent,” he says. “The company showed a sales growth of close to 40% above 2004. It has established itself as the dominant supplier of explosives in the West African hub of Ghana, and is in line for further significant growth in the region during 2006.”
In 2005 AEL produced a record number of detonator assemblies in Ghana for use in various West African mining operations. Manufacture of detonators more than doubled from 2003 to 2005.
AEGL has several well established contracts in Ghana and Mali, among them the Gold Fields Ghana Limited (GGL) Tarkwa mine and Damang mine, the AngloGold Ashanti (AGA) underground operation at Obuasi, the Bogoso Gold Limited project at Prestea, and the Wexford Goldfields Limited operation at Wassa. Bogoso Gold and Wexford are both part of the Golden Star Group. The AEL relationship with the Morila Mine in Mali continues, and the company’s managing director for Francophone West Africa, Nigel Convey, says AEL Mali SARL has expanded its operations to include the underground Kalana mine, as well as the majority of the civil, construction and road building industry in Mali.
“These operations in Mali have enabled AEL to build a reliable and reputable storage and distribution chain from the Ghanaian ports into the surrounding countries, many of which are landlocked,” he says. “This single fact alone has enabled AEL to tender for business in these countries with confidence in the reliability of supply of its products.”
Building on its successes in Mali, AEL has continued to pursue new business in the surrounding countries of Burkina Faso, Niger, Guinea and Sierra Leone.
“Initial success was achieved by trading in these countries,” says Convey, “and as the AEL brand became established, interest was created within their mining industries. This culminated in the signature in early 2006 of two new contracts for mines that will be opening during the course of the year.”
Convey explains that in order to service these new customers – which are situated in Guinea and Burkina Faso – AEL has opened subsidiary limited liability companies in both countries. “These have been incorporated as AEL Guinea SARL and AEL Burkina SARL, and have offices in Conakry and Ouagadougou respectively.”
Following the takeover of the Lero mine in Guinea by the Crewe Gold corporation, a significant investment and mining expansion program was announced in the Lefa Corridor. A team of consultants, led by the RSG Global group from Perth, Australia, approached a number of suppliers to the mining industry, and says Convey, “AEL was successful in its bid to supply the blasting explosives and accessories to the mine. This consolidates the company’s position as the leading explosives supplier in Guinea.”
“In order to service the Lefa Corridor, AEL has invested almost R5 million (US$0.7 million) on the purchase of a new mobile manufacturing unit, a depot at the mine, and other ancillary equipment,” Convey says. “We are mobilising, and delivery of the vehicle and equipment is scheduled for July 2006. Blasting is expected to commence in the third quarter of 2006.”
The Lefa Corridor Mine is being supplied from AEL’s Francophone base in Mali, and the emulsion is manufactured at the company’s Morila plant.
Turning to Burkina Faso, AEL has also been successful there in expanding and establishing new business.
Not previously a well-known destination for mining companies, Burkina Faso is, with the higher gold price, developing the potential to host a number of international mining companies, predominantly in the gold mining industry.
Being a Francophone country, it is not surprising that many of these companies are French Canadian, as is the case with AEL’s first customer in Burkina Faso – Societe des Mines de Taparko (SOMITA), a subsidiary of the High River Gold Corporation, based in Canada.
“SOMITA has awarded a two-year contract to AEL for its Taparko gold project some 100 km from the capital, Ouagadougou,” says Convey. Initially not a large contract, AEL will be providing re-deployed equipment while the mine is in its expansion stages.
Looking further ahead, Burkina Faso is expected to experience a significant increase in mining activity from a number of new projects currently in the evaluation phase. This, in turn, could trigger substantial expansion in the demand for AEL explosives and accessories.
AEL is also active in Niger, where the Samira Hill gold project – west of Niamey and owned by the Canadian/ Moroccan company SEMAFO – is being supplied with bulk explosives. While blasting has commenced at low volumes, they are steadily increasing. The two- year contract will be worth in the vicinity of R7.5 million (US$1 million) a year. Added to that, the strategic importance of the company’s presence should enable AEL to pursue other business opportunities in Niger.
In addition to the projects described above, AEL Ghana has been successful in supplying customers in somewhat remoter locations. Since 2003, the company has been providing explosives, accessories and technical services to the Koidu Diamond Mine in Sierra Leone.
“Generally speaking,” Convey says, “the outlook for the whole explosives and mining supply industry in West Africa is very positive. New projects are coming on stream, and the higher gold price is making marginal products in the region more feasible.”
Headquartered in South Africa, AEL is well established in East, West, Central and Southern Africa, operates in 16 countries, and has explosive manufacturing plants in South Africa, Ghana, Mali, Tanzania, Ethiopia, Zambia and Botswana.MRA