Interview with Max Emedi Madjani, Chief Financial Officer, on AEL Mining Services DRC new emulsion plant at Kansuki and the benefits of producing in country.

Max Emedi Madjani Chief Financiar Officer AEL Mining Services DRC

Max Emedi Madjani Chief Financiar Officer AEL Mining Services DRC

AEL is a supplier of explosives technology and initiating systems in Africa.  What is the company’s overall corporate structure and where is it operating?

AEL Mining Services is a member of AECI (African Explosives and Chemicals Industries), a conglomerate chemical company based in South Africa and listed on the Johannesburg Stock Exchange and is considered one of the major contributors to the mining industry in Africa as far as developing, producing, supplying of commercial explosives, initiating systems and blasting & fragmentation services are concerned. With Africa being AEL’s home market, the company is also widely regarded as a leader on the African market given our current footprint, and we have the appetite to expand further. Internationally, AEL is present in South East Asia in places such as Indonesia and we recently also opened an office in Australia. We are also present in Chile, South America and Europe. In Africa, AEL is present in Namibia, Botswana, Zimbabwe, Zambia, DRC, Congo Brazzaville, Tanzania, Egypt, Ghana, Burkina Faso, Guinea and Mali with our headquarters being in Johannesburg, South Africa. Within the DRC, AEL is still under expansion. Apart from our established presence in Katanga, we are also working in north eastern DRC, where infrastructure conditions still pose a challenge in terms of accessibility and we are therefore currently supplying only packaged explosives, as it is easier to transport them on site.

In 2013, AEL’s emulsion plant at Kansuki was commissioned and you are now close to your official opening. What is the significance of this opening for the local mining industry in Katanga?

AEL’s emulsion plant in Kansuki is the first of its kind in DRC and will lessen the country’s dependence on imports, will reduce AELs input costs and will ultimately benefit end users and our consumers. Bulk emulsion represent more than 50% of explosives consumed in DRC and AEL Kansuki’s plant has the capacity to produce 2,000 tons of emulsion per month at its peak and will therefore work as a major supplier to the local market, lessening, as aforementioned, the country’s dependence on imports. Having an explosive plant in Katanga will also bring an advantage in terms of reducing AEL’s import costs. AEL was previously importing from its Zambian production facility based in Mufulira and from its industrial hub in South Africa. Producing locally will therefore reduce AEL DRC’s input costs in terms of logistics and import duties. Our end consumers will also benefit in terms of costs savings and will hopefully be able to leverage on this by investing further in order to process in country.

What is AEL’s emulsion plant capacity and what is your current growth plan?

AEL’s Kansuki emulsion plant will have a production capacity of 3,000 tons per month once fully operational. The current demand for bulk emulsion in Katanga is of approximately 1,300 tons per month (annual average) and AEL is already covering most of that demand. However, we expect for this demand to increase going forward due to new projects developing in the region and current the expansion plans of certain existing mining operations. AEL is therefore looking to increase production to approximately 1,500 tons per month by the third quarter of 2014 and to 2,000 tons by the first quarter of 2015.

How well developed is the legislation around the explosives industry in DRC?

The legislation in DRC concerning the explosives industry dates back to 1955 and AEL is currently working with the government to update the country’s regulatory framework. The laws are stringent but do not take into account of technological innovations that are occurring in recent years as far as commercial explosives and initiating systems are concerned. As a post war country, the authorities still perceive explosives as a security risk and therefore as an extremely sensitive product. Acquiring explosives licences is therefore complicated, applicants have to prove to be operating safely and must adopt the highest security standards. As a stakeholder in the industry, AEL is working to change the overall perception in Kinshasa, with state officials now recognising that bulk explosives play a critical role in the growth of the mining industry.

What are some of the other challenges of operating from a country like the DRC?

The main challenge for explosives manufacturers & suppliers consists in complying with all laws and regulations surrounding the industry. There are no shortcuts around the regulations, as we operate in an industry that is of national security interest and therefore the authorities are vigilant. Having said that – this is true of any country in which an explosives supplier operates. There are then more unique challenges, such as logistics, that are due to the state of the country’s infrastructure that does not allow you to reach out to all potential customers. However, while challenges are undoubtedly present in DRC, AEL remains positive and committed to the country. We have been operating here long enough to understand the mechanisms and requirements of the country. AEL strongly believes in the future of the DRC and sees itself growing within the country and contributing to elevating the levels of the mining and the overall explosives industry in DRC.

Where do you foresee some of your key growth markets within the DRC?

Historically, AEL strategy in DRC has always been to take one step at a time and we have now been present in Katanga since 2006 efficiently servicing all major mines. Going forward, AEL’s vision consists in reaching other parts of the country such as the region around Kinshasa where we are looking to service the quarries – we are then also aiming at establishing a stronger footprint in north eastern DRC to serve the gold mining operations there.