IBISWorld Market Research
The closure of less-profitable mines and delays to planned capital expenditure into new mines will slow industry growth.
Melbourne, Australia (PRWEB) March 31, 2015
Operators in the Explosive Manufacturing industry in Australia have been indirect beneficiaries of Australia's resource commodity boom. Robust demand from the thermal coal market, capacity expansions in mining industries and strong ammonium nitrate (AN) prices have been key growth drivers over the past five years. Responsible for the provision of almost three million tonnes of blasting explosives each year to Australia's mining and quarrying industries, the industry's fortunes are inextricably tied to Australia's resource sector. According to IBISWorld industry analyst Arna Richardson, “industry revenue growth is expected to slow as weakening commodity prices and excess supply take a toll on the Mining division.” In 2014-15, industry revenue is forecast to grow by only 2.2%, which is well below the estimated annualised growth rate of 10.2% over the five years through 2014-15. Nonetheless, industry revenue is forecast to reach an all-time high of $3.6 billion in 2014-15, up from $2.2 billion five years earlier.
Industry growth is expected to slow over the next five years, returning to its traditional path. This slower growth reflects the increased uncertainty plaguing the global mining industry, which is “currently contending with rising operating costs, falling commodity prices, higher development expenditure in the face of lower grade ores and plummeting profit relative to recent historical highs,” says Richardson. All these factors will influence demand for explosives. Furthermore, the closure of less-profitable mines and delays to planned capital expenditure into new mines or project expansions will also slow growth. The industry displays a high level of market share concentration. Major players include Orica Limited and Incitec Pivot Limited.
Revenue will be boosted by declining mine grades and an increased reliance on tunnelling as mine operators are forced to dig deeper. Complex geological mining conditions will not only require greater volumes of explosives but technologically advanced explosives designed to achieve greater accuracy and energy efficiency. The Explosive Manufacturing industry will become increasingly involved in the provision of productivity-based blasting services, including high-intensity blasting and other value-added specialised services designed to extend the economic lifespan of mines while also reducing their associated carbon footprint.
For more information, visit IBISWorld’s Explosive Manufacturing industry in Australia report page.
The industry is comprised of companies that manufacture explosives. The main product grouping is commercial explosives, including ammonium nitrate based explosives. Other products covered include initiating systems, propellants, pyrotechnic products (fireworks and flares) and explosives produced for the use by the military. Industry participants may also produce blasting accessories such as blasting and detonating caps, fuses and cords, and detonators and safety fuses.
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