South African chemicals giant AECI has announced a major strategic shift that will see it sell off its noncore businesses and focus on its core mining and chemicals capability. The company aims to double the profitability of its core business by 2026 and become a global top three integrated mining explosives and chemicals solutions provider by 2030.
The decision follows a comprehensive review of the company’s operations, in which the board and management identified the business units that are central to the sustainable and profitable growth of AECI. The company said the changes are aimed at ensuring that it is better positioned to navigate the changing environment and seize new opportunities as it approaches its centennial anniversary in 2024.
AECI plans to divest from its identified noncore businesses – Much Asphalt, Animal Health, Schrim, Sans Fibers and Beverage – over a period of time. AECI CEO Holger Riemensperger said that some synergies exist across its diversified industrial group, while other business units within the portfolio have no synergies. He said that those underperforming units would be better served under different ownership.
AECI Mining will remain the group’s main growth focus. The business will look towards growth in Asia-Pacific, South America and North America as it drives its ambition to be among the top three global suppliers of its kind by 2030. AECI Chemicals will be re-organized and repositioned to enhance its cash generation capabilities through prioritizing high-margin products and services and ultimately support the growth of AECI’s Mining division.
AECI employs more than 7,000 people across 100 sites, with a presence in 22 countries on six continents. The company’s products and services include mine-to-mineral solutions, water treatment solutions and chemical raw materials and related services.
The company’s announcement was well received by the market, as its share price rose by 4.5% on the Johannesburg Stock Exchange on Monday. Analysts said the move was a positive step for AECI, as it would allow it to focus on its core competencies and improve its margins and returns.
AECI is not the only chemicals company that is undergoing a strategic transformation. Earlier this year, BASF, the world’s largest chemicals producer, announced that it would sell its construction chemicals business to a private equity firm for 3.17 billion euros. The company said the divestment was part of its portfolio optimization and simplification strategy.
AECI said it recognizes that to secure its place for the next 100 years, it must embrace change, progress its strategy and navigate market shifts with agility and profitability. The company said it believes the changes it is making will be net positive for the business and will unlock value for all of its stakeholders.
Source: [Mining Weekly]
