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AECI to Spend $59 Million on Deals, Hard to Justify More

July 25 (Bloomberg) -- AECI Ltd., Africa’s largest maker of explosives, will spend about 500 million rand ($59 million) on acquisitions of smaller businesses outside its home market over the next 12 to 18 months to expand in the region and Brazil.

“We’re not investing much,” said Chief Executive Officer Graham Edwards in a phone interview from Johannesburg. “We’re not overly being aggressive at this point in the cycle.”

AECI, based in the city, spent about 280 million rand in the first half increasing capacity at its explosives and chemicals businesses, it said in a separate statement. The company is also shifting abroad after a lack of clarity from South Africa on its mining industry policies, Edwards said.

The nation’s ruling African National Congress last month failed agree on how to extract more revenue from mine operators, Enoch Godongwana, a party official, said at the time.

AECI will focus on managing its working capital rather than spending on larger investments. “There will be no big capital projects on the horizon at the moment,” Edwards said.

The company will sell about 300 million rand of industrial property in Johannesburg over 18 months as improved explosives-testing technology means the land is redundant, he said.

“The land will be available for sale in the next four months” and is “very valuable, in the city,” Edwards said.

To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at sikonathim@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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