With all the turmoil in the ammonium nitrate markets in recent months, most explosives companies should be congratulated for maintaining supply to their customers, particularly those customers that have traditionally been supplied from Russia.
Leaving commercial considerations to one side for a moment, the ability of most explosives companies to quickly adapt their supply chains and maintain supply is a real achievement. Don’t forget that AN is a dangerous good, often with many licensing and permitting considerations, as well as compatibility considerations (with emulsions, for example) and all the associated change management needed to change from one supply source to another.
Suppliers that have been able to ensure no interruptions to blasting operations during this period deserve a pat on the back.
Commercially, it’s clear there have been some very difficult discussions recently in order to reconcile existing contractual obligations with unforeseen changes in underlying markets.
Moving forwards, being able to determine the most commercially attractive AN supply options may become significantly more challenging for miners. There are now a range of new issues to be accounted for in terms of sanctions, quotas, new supply sources (with different index prices, or even spot pricing) and different freight routes. Adding further headaches is the unfortunate reality that many of these factors change during the course of the year.
Miners will need to make sense of all of these variables in order to understand which supply options make sense for them at different points in time and over different supply periods. Those considerations will need to be balanced with security of supply and the total cost of ownership between explosives companies (and the AN sources they each propose).
The volatility in the underlying natural gas, ammonia and ammonium nitrate markets means that is now a more complicated task than it was previously… not that it was ever simple!
When it comes to ammonium nitrate and industrial explosives, at Moncourt Group we use our independent subject matter expertise to make sense of this complexity and identify where the value is hidden. We support our clients to fully understand the alternatives available to them, including the risks and benefits and to implement the solutions that are right for them.
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