CHEMICALS business Omina Holdings has staged a remarkable turnaround in the last four years. Since tapping shareholders for R2bn in 2019, the company has returned R4bn. At R63 apiece the share price is currently triple the rights issue (R20/share). In addition to share buy-backs, a special dividend of R3,25 was declared for the 12 months ended June adding to the R3.75/s ordinary payout.
Critical in this recovery has been the firm’s mining division. The mining explosives division BME was the only division to meaningfully grow its margin in Omnia’s 2024 financial year as commodities flatlined, dampening the group’s agribusiness division.
According to CEO Seelan Gobalsamy, shareholders can expect a yet more concerted effort growing BME internationally.
“While the agribusiness segmen is strong and we’ve got incredible assets our mining business is incredibly globally competitive,” Gobalsamy said on Wednesday. “We have put a thrust of capital and bandwidth behind the mining business with a lot more profits coming through that segment and from the international side of mining.”
Gobalsamy was commenting on the day BME held a presentation to media on its venture with Sweden’s Hypex Bio Explosives Technology. BME invested R200m for a 8-9% stake in Hypex Bio and signed an exclusive licensing agreement to use its technology – a hydrogen peroxide emulsion (HPE) – in Canada, where BME has already laid down tracks.
Ralf Hennecke, CEO of BME, says HPE will be launched as early as the fourth quarter. He, and his oppositive number at Hypex Bio, Thomas Gustavsson, an electrical engineer, says the technology has the potential to “revolutionise” the mining sector by halving emissions and cutting costs through the process chain (including fuel consumption). There’s also the obvious benefit of compliance that better ESG brings. Mining companies are scrambling to shorten regulatory processes for projects which then lowers capital intensity.
While the science behind HPE is “as old as the hills”, Gustavsson says Hypex Bio is the only company with proof of concept and a marketable product. It is selling in Europe. Omnia is hoping technology of this ilk will be a gamechanger though one gets the sense Gobalsamy is keen to see the take up first.
When asked if Omnia’s BME would considering taking more shares in Hypex Bio, Gobalsamy replies: “The more important part of the relationship is the exclusive distribution agreement where we have committed to work together with the entrepeneurial team at Hypex Bio to develop the product”.
Gustavsson, who previously worked at the company that spotted the opportunity in the science, says he’s open to further investment since globalising the explosives technology into a blue riband standard is a “massive” job requiring “an insane amount of capital”.
He adds: “This means we will have a couple of financing rounds and obviously that will require a package of financing solutions in the form of equity as well as debt and other forms of financing. But you can understand the sentiment.” Importantly, BME has right of first refusal on rolling out HPE is predetermined geographies.
HPE is one of several bets BME is taking in international and African mining. In April it bought shares in Indonesia’s second-largest explosives company, MNK.
