Explosives and chemicals group AECI is expecting an operational recovery at its iconic Modderfontein plant in the second half of 2025, following a difficult first few months to the year when output was affected by a disruption to the supply of electricity and a key input material.

However, the long-term outlook for the site, which has been a feature of the South African industrial landscape for more than a century, is uncertain.

CEO Holger Riemensperger reports that Modderfontein experienced an unprecedented 16 power interruptions during the first four months of 2025, despite its status as a national key point that is not disrupted even during loadshedding and being on the same power infrastructure as the OR Tambo International Airport.

While the facility has experienced some difficulties in the past given South Africa’s multidecade-long electricity supply imbalance, which culminated in a period of almost daily cuts in 2022 and 2023, Riemensperger tells Engineering News & Mining Weekly that it has never before faced this level of disruption.

Even a five-second power cut, he explains, results in a full day of lost production, owing to the time it takes to ramp up the plant, and AECI estimates that the 16 incidents cost it about a month of lost output.

There have been intense engagements with Eskom over the problem and there have been no further interruptions since April.

However, Modderfontein also declared force majeure during the first quarter, owing to inadequate supply of an input material known as lead azide, which is supplied by another State-owned entity, Denel, and used to manufacture non-electronic detonators.

Owing to the fact lead azide is too unstable to import, the JSE-listed group has dispatched a technical team to the Denel unit to help improve production.

Nevertheless, supply of the material has become a structural risk and AECI has, thus, identified a replacement input, which is expected to be ready for integration into the manufacturing process in about a year’s time.

In parallel, AECI is assessing the future of the Modderfontein site, which has been in operation for 126 years and where the vast tracts of farmland that once surrounded it have been progressively developed into residential and light industrial properties.

Asked by Engineering News & Mining Weekly what the future holds for AECI’s facility at Modderfontein, Riemensperger responded as follows: “There are many questions around that site and how to take that forward, which is something that we will deal with in the second half of this year, and we intend to provide to the market a very clear way forward in our November capital markets day.”

He highlights, too, that an analysis of AECI’s mining services business shows that 95% of its explosives business is based in Australia, Ghana, the Democratic Republic of Congo, Zambia and Botswana.

“There are another 17 countries that we operate in that share the other 5% between them,” he explained, implying that Modderfontein is already a modest part of the explosives business despite its substantial historical contribution.

The Modderfontein review comes amid an already far-reaching restructuring of AECI, which has been under way for two years and which involves the disposal of businesses that are not core to the group’s current stated ambition of being a top-three global supplier by 2030 in its selected market segments of mining explosives, chemicals and technology.

During the first five months of 2025, the group sold its Much Asphalt business for R1.1-billion, which was a major contributor to it being in a position to pay off R1.4-billion of debt, and enabled it to transition to its targeted debt levels.

The group's net debt position as at May 31, 2025 was R3.4-billion, down from R4.7-billion, and translating to a gearing ratio of 28%.

Further disposals are being pursued across various noncore agriculture, water and chemicals units, including the Schirm business, where the disposal of the German business will resume after being halted to enable a restructuring process to unfold. The US unit will now also be disposed separately.

In the meantime, the company is expecting to report an overall improvement in its half-year results to June 30,  supported by the underlying performance of its core businesses.

Those results are due to be published on July 30.