OMNIA Holdings’s international push will most likely define the term of Seelan Gobalsamy, who became CEO of the chemicals, agribusiness and mining explosives company nearly six years ago. Shares are 200% higher over that time.
Growth has come from its explosives subsidiary BME, whose profit in the 2025 financial year could be the best yet for Omnia. The question is how long this can continue, especially given the threat posed by the administration of US President Donald Trump. US tariffs currently set at a baseline of 10% alongside higher, sector-specific charges on products such as steel, aluminium and autos.
As with all companies, large and small, tariffs are troublesome for BME especially as it only recently established a footprint in Canada — one of Trump’s chief targets. A month after ‘Liberation Day’ on April 2, economists are already warning the world economy is feeling the effects. “US tariff policy is a serious negative shock for the world in the near term,” Isabelle Mateos y Lago, group chief economist at French bank BNP Paribas told Reuters.
Gobalsamy says the economic impact of Trump’s world view will take at least six months to settle, so he feels no compulsion to change the business approach yet. The possibility of peace in Ukraine lowering gas prices and affecting the explosives market is just one of many possible outcomes.
And change is not necessarily bad. In Gobalsamy’s view, BME is a disrupter. As a new entrant, it is elbowing its way into the North American market to such an extent that rapid change to the regional business environment could be as much a boon as a threat. Onshoring, what Gobalsamy calls having a “redundancy of supply”, was already shaping the world economy as a response to Covid and China’s supply chain dominance before Trump began hastening it by dismantling the global village through tariffs.
The greater threat posed by the Trump administration is its hostility to ESG, manifest in the defunding of the US Agency for International Development. “Omnia and BME’s investments are underpinned by very strong sustainability strategies,” says Gobalsamy. The agribusiness in particular, which promotes environmentally kinder approaches to crop yield, could suffer the dual effects of lower economic growth and loss of corporate focus.
“It’s a bit disappointing now that some global companies have turned their back on certain components of ESG goals, but I think in the long term that has to come back,” says Gobalsamy. “When we look at the weather patterns, the storms, the flash floods, the winds, I don’t think society can just ignore climate change; it’s there.”
Despite the flux, Omnia intends to press on expanding BME internationally. A joint venture in Indonesia has been a big success for the group. Two joint investments offshore are set to be unveiled in the next 12 to 18 months. Given the relatively pedestrian performance of the agribusiness, which is largely Africa-focused, Omnia may soon have to face the strategic issue of becoming exclusively a mining explosives firm.
There are precedents for this, says Gobalsamy, but they apply less to Omnia. What he would prefer is better market appreciation that the company is deeply integrated. “Sometimes it’s a bit difficult for the market to fully understand our company,” he says. “When they think of Omnia, they think of a fertiliser company, but if you actually look at us deeply, you’ll see we are a much bigger explosives company.” There is a structural reason for this, as the chemicals for BME’s explosives are actually produced by assets in the agribusiness.
Then there are the obvious benefits of diversification. The agribusiness is hardly in a slump. Omnia has guided to medium-term margins of 9% to 12%, compared with a five-year historic margin of 4% to 8%. This compares with 10% to 12% for BME against its historic performance of 7% to 12% over the past five years (the business has grown north of 35% over the same period). The agribusiness is still growing at a decent clip, making it worth keeping even when there are failures at Transnet, for instance.
“We can optimise that production to make sure mines have explosives all the time. So when there are port disruptions and supply chain disruptions, we can make more explosives and make sure the mines keep going, and then make the fertiliser later,” says Gobalsamy. “Whereas if you are a pure explosives company, you won’t have that flexibility,” he says.
More broadly, Omnia is exposed to primary industry. People need to eat and, as made plain by the political goals of the US, Russia and China, there’s growing pressure to secure decarbonising critical minerals through mining.
The mining explosives business will remain at the sharp end of Omnia’s strategy, however. “We do know that BME has lots of potential and a bigger BME, double or triple or quadruple in size, would have a revolutionary impact on Omnia’s overall business,” says Gobalsamy. “So we haven’t stated that as publicly perhaps as our local competitor has, but our ambition is certainly to grow BME significantly and doing that organically is a big tick for us.”
A version of this article first appeared in the Financial Mail.
