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Companies commoditising explosives as Asian market slows

24th October 2014

By: Zandile Mavuso

Creamer Media Senior Deputy Editor: Features

  

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The fall of thermal coal prices in China has had a negative impact on the Asian mining industry, leading to companies requiring explosives to be commoditised, says explosives company AEL Mining Services.

“Overall cost production in the coal industry in China is in excess of the selling price currently. As a result, a lot of companies are operating without profit,” says AEL Mining Services Asian Pacific executive director Patrick Foo.

He adds that, this being the case, China’s decision to reinstate tariffs on imported coal has also impacted on the mining industry.

Financial Mail reported recently that China’s Finance Ministry was imposing tariffs of 3% on anthracite and coking coal, 5% on briquettes and 6% on coals. These have been reinstated after they were scrapped in 2007 when coal demand was soaring.

Foo indicates that this has led mining companies and mining contractors to consider ways in which they can cut costs in their operations and develop mechanisms that would allow their businesses to stay afloat.

“In the explosives industry, mining companies are looking at ways in which they can commoditise explosives and not purchase them if the minerals that they mine do not necessarily need that specific type of explosive,” he mentions.

This has encouraged explosive companies to improve their technologies to enable them to provide what is needed by industry.

“This requirement by the mining sector has the ability to put small companies out of business, while larger companies might still benefit as they have already established themselves in the market,” Foo points out.

He indicates that for AEL Mining Services, the challenges that currently exist in the Asian mining sector will not affect them drastically; however, the challenges will require the invention of new technologies in order to service the market adequately.

Having a strong manufacturing and research and development department, Foo believes that AEL Mining Services has the ability to create “door-opening opportunities” in this market by way of new technological advancements.

He adds that the company is already familiar with the Asian market and understands the culture that exists and adapting to new trends and challenges will not present difficulties for the company.

Although the market seems to be slowing down, Foo mentions that it is nothing unusual and he is positive that it will accelerate again in the future.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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