Rising opportunities in the mining sector and increasing military expenditure are expected to generate reasonable revenue across the globe

Published On: March 2018

Market Overview:

Dynamite is solid or liquid mixture of substance which is designed to produce an effect by heat, sound, gas or smoke at under high pressure and temperature. Commercial and military explosives are two different forms used in dynamite industry. Commercial explosives market currently caters for mining, quarries and civil engineering works which rely heavily on ANFO, black powder and nitroglycerine among others as a raw material for their blasting needs. The energy provided by commercial (civil) explosives are mainly used for breaking rocks or oil extraction in the quarry, mines, and civil engineering works. Thus, the future of civil explosives is directly related to the evolution of this industry, and it varies from country to country as regulation regarding transportation of explosives is more restrictive. However, industrial revolution carries new discoveries in explosives market and initiation technologies. Nevertheless, military explosives such as HMX, RDX PETN, and Semtex among others are some of the examples used in booster charger to demolish some of the building and structure. Although ANFO’s characteristics originally developed for use in mining are also used to some extent in military application. However, with growing expenditure on military and defense activities coupled with rising infrastructure and mining projects is generating market revenue among regional players.

The mining industry is enhancing new avenues across different countries

The mining industry is experiencing rapid growth mainly due to high dependence of end-use industries on the supply of commodities from undergrounds such as minerals and metals. The highly fragmented industry comprises of coal, iron ore, and other precious metals for development of high tech industries. The global mining companies are adopting bioleaching technology and automated remote technology with data transmission via real-time monitoring activities for mining, which is expected to lead the industry towards sustained growth.

China’s mining sector is dominating the market and is likely to continue to be the major player in the global mining industry. China contributes 50% to global coal demand and remains the largest consumer of coal. Chinese mineral reserves are diverse and fragmented with many companies operating in the same mining area. In the view to increase efficiency, improve safety, and environmental performance, consolidation has encouraged the companies to maximize profit. On-going infrastructure projects such as Dubailand, Dubai, London cross-rail project and Jubail II industrial city project, Saudi Arabia are anticipated to drive the growth potential in coming years. The numerous mining companies in Australia are extending exploration activities at a deeper level of technology advancement. Coal is a highest dominating segment and undersupplies of energy in many countries is the main factor driving the coal-based energy demand.

Similarly, India is rich in mineral resources and coal mining accounts for 70% of the explosives application in 2016. India mining sector is providing lucrative opportunity, especially in most backward districts of the country. Thus, mineral-rich districts can create a cluster growth across India. Downstream industries such as power generation, steel plants, and aluminum smelter are providing industry growth along with growth in civilization. Increasing liberalization of mineral policies such as longer lease agreement such as 20-30 years and 100% FDI in the mining sector is expected to propel the market growth. Power and cement industries are also aiding growth in the mining industry.  

Increasing military expenditure also positively impacting the explosives market

Military explosives such as RDX, TNT, and HMX are produced in large quantities and used for open pit and underground mining along with long-range explosives in military application. Arms and ammunition industry has grown significantly in recent years, due to increasing cross-border activities and illegal trading activities. Rising political unrest in Middle East & Africa and Europe, increasing defense spending especially in arms & ammunition are some of the factors positively influencing the growth of dynamite market. In 2016, total military spending was roughly around USD 1.68 trillion and expected to reach 3 trillion by 2023. Countries like China, India, the United States, Russia, and France are leading countries that substantially increased their military spending to strengthen their armed forces. Advanced technology and smart weapon are complimenting the growth of the dynamite market. Furthermore, RDX and HMX are used also used in oil and gas processing. In many oil exporting countries, increases in military spending have been correlated with high oil prices. Subsequent, oil price slump impacts the national budget especially oil-extracting countries which inherently cuts down military spending. Thus, the decline in military spending can hinder the market growth in coming years.  

Competition scenario: - Global players are holding largest market share, and rest is covered by regional market players

As per our analysis, major players operating in the dynamite market are holding considerable market share through generating reasonable revenue from the particular business portfolio. The prominent manufactures operating into the market are Hanwha Corp., Incitec Pivot Ltd, Pakistan Ordnance Factory, Austin Powder Gmbh, Eurenco SA, Explosia, Inc., EPC Groupe, Yara, Nitroerg SA, Forcit Group, Titanobel, Solar Industries India Ltd, MAXAMCorp Holding, S.L., Orica Limited, IDL Explosives, Enaex, Anhui Jiangnan, China Poly Group Corporation, BME, NOF Corporation and Ideal Industrial Explosives Ltd. among others.

The global dynamite market is fragmented with presence of a strong global as well as regional players in commercial as well as industrial explosives. Product launch is key strategy adopted by dynamite manufacturers. For instance, Orica Company Limited launched a new product Vistis Bulk System to meet growing demand in Australia for explosives in mining industry. Majority of companies are investing more into product innovation to cater growing demand for safe & effective explosives. Key players are also expanding into new geographic areas to capture market share. For example, Hanwha Corporation acquired LDE corporation to expand mining activities in Australian market. Similarly, Orica and Eurenco exports the products and has presence in more than 100 countries. Solar Industries Limited (SOIL) has forayed into defense segment since 2011 with key supplier of HMX and propellants in Indian market. Solar industries expected 45-fold rise in revenue from defense sector in coming years. Thus, dominant market share of 43% in explosives market in India, Solar Industries are fledging defense business with advanced technology and innovative products. However, stringent regulation, high initial investment, high insurance and safety costs during manufacturing has adversely affect the regional players. Thus, market entry barriers faced are limited in terms of mid-size companies. This could promote existing players to invest in advanced technology to meet growing demand across end use industries.