Supply Surplus of Explosives in Australian Market to Continue till 2024

The commercial explosive market in Australia will be growing at a steady rate and the supply surplus will continue during 2021-2024. The current ammonium nitrate capacity that the market has will be able to handle the demand from mining explosives till 2025. Orica and Dyno Nobel are the major players in the domestic market, holding 65 percent of the market share. 

“The continuous decline in grade of both surface and underground mining has led to increased exploration, which in turn, acts as a driver for the rise in demand from the explosives,” said Siddharth Kannan, Research Analyst at Beroe. “In the coal industry, majority of the demand is from high quality, low ash, low Sulphur type of coal that is expected to drive the demand for explosives and allied accessories. Mining was deemed an essential activity by the Australian government. Hence the demand for explosives was strong in Australia during 2020.”

The commercial explosive market in Australia was characterized by a supply surplus in 2021 that went to about 1.14 MMT. This number is expected to steadily grow in the coming years. The demand for metallurgical coal is expected to grow from 275 MT in 2017 to 372 MT in 2030, a growth of 2.3 percent. This will impact the demand for mining explosives in Australia through the decade. There are plenty of junior mining companies looking to explore the market for battery materials like lithium and cobalt, which will further drive the market in the next 5–10 years.

The mining exploration and production expansion in Australia from 2005 to 2008 and 2010 to 2012 witnessed new ammonia nitrate manufacturing plants. This stabilized the market, but as the mining expansion slowed, the market turned into a supply surplus. Both Orica and Dyno Nobel are integrated manufacturing companies with ammonia and ammonium nitrate manufacturing plants in Australia. During 2010-2012 Orica and Dyno used to source AN, which is used as raw materials for manufacturing explosives, from CSBP.

• Orica has 25 production facilities in the Americas, Australia, APAC, and Europe. The products offered by Orica include EGAN, HDAN, Sodium cyanide, Floatation agents, Emulsifiers, Explosives, Blasting agents, Initiation systems in over 50 countries.
• Dyno Nobel, a wholly-owned industrial explosives business subsidiary of Incitec Pivot Limited, offers EGAN, HDAN, ammonia, nitric acid, urea, UAN, emulsions, carbon dioxide liquid, initiating chords, detonators, packaged and bulk explosives.
• CSBP has been one of the top suppliers in the ammonium nitrate market. With secure storage of ammonium nitrate prill and nitric acid and the continuous operation of ammonium nitrate plants, it can meet the requirement from mining industries in Australia.

Dyno Nobel has conducted a $2.7 million feasibility study to assess the potential to use renewable hydrogen to increase ammonia production at its Moranbah facility. The study looks at the potential to use renewable hydrogen produced via electrolysis to increase ammonia production at its facility.  If feasible, the proposed solar hydrogen facility would include up to 160 MW of electrolysis capacity and a 210 MW solar farm co-located at Moranbah.

 “For mining companies, 5-10 percent of procurement spend goes into mining explosives. So, engaging with the right supplier is highly critical for effective cost saving and to reduce risks, as well as to achieve the defined goals efficiently,” said Siddharth Kannan of Beroe. “In this case, procurement intelligence comes to play a more important role for these companies. Having an adequate understanding of the market, suppliers, and upcoming trends like focus on using renewable hydrogen to increase ammonia production can make a big difference in their procurement strategy”.