Australia''s Orica buys Excel Mining of the US for $670 million

Our Corporate Bureau
25 September 2007

Australian explosives, chemicals and paints manufacturer Orica Ltd has bought US-based specialty bolt maker Excel Mining Systems LLC for a price of $670 million (A$775 million). The American company makes specialty bolts and accessories that provide strata support in underground mines by stabilising roofs and walls in the mines.

Orica makes many things. Among these are its Minova brand resins, used along with bolts in underground coalmines. The synergies are obvious. A number of Excel''s customers are also customers of Minova and Orica Mining Services.

Excel is the biggest producer of mining bolts, and caters entirely to the North American market, which is over $700 million. Orica''s Minova resins lead the field in the US market. The size of the global market for mining bolts is about $1.7 billion.

Orica MD and CEO Graeme Liebelt

The Melbourne-based Orica, the former Australian arm of the UK''s ICI group, is the biggest explosives producer in the world. It owns brands such as Dulux, the home decorative product. In April 2007, it had rejected a A$9.95-billion buyout bid by private equity groups Bain Capital and Blackstone.

Orica managing director and CEO Graeme Liebelt says the Excel deal "is consistent with our strategy of growing our business close to the core in markets that we believe have a long term growth outlook. Globally there is a trend toward underground mining and, importantly for Orica, an increasing focus on safety. These trends are very positive for the future growth of Minova and Excel."

He adds, "The combined leading positions of Minova with its chemical based strata products and Excel''s metal based specialty products, provides Orica with a springboard for new growth opportunities." Orica plans to expand Excel''s operations outside North America. Orica already has customers in several countries, and will expand Excel''s business to China, Russia and Australia, and possibly Latin America.