US$31 million investment will double profitability of AECI business in USA

AECI is investing US$31 million (± R505 million at today’s exchange rate of R16,29) in two strategic growth projects that will double the profitability of AECI Schirm USA on an ongoing basis moving forward. The investments build on AECI Schirm USA’s impressive growth trajectory of the last two years and is being funded from the business’s cash reserves and future cash generation.

AECI Schirm USA is a leading contract manufacturer for the crop protection industry. A well-established site in Ennis, Texas logistically services the Southwest and a newly acquired site in Benton, Illinois logistically services the Midwest, which is widely regarded as “America’s breadbasket” because of the large volumes of corn, soybeans and wheat that are farmed there. After repeated enquiries from customers who sell globally (including the USA as a whole), AECI Schirm USA acquired the site in Benton, Illinois as an existing industrial facility from Bio Fuels by American Farmers & Veterans for US$2,3 million in 2021.

The two strategic growth projects, which are scheduled for completion before the end of 2022, are:

1.  ENNIS – PRODUCTION CAPACITY EXPANSION

Four new plants will be constructed, including one herbicide Suspension Concentrate (SC) plant, one insecticide Emulsifier Concentrate (EC) plant and two insecticide SC plants. (An EC plant produces liquid crop protection products where a liquid or solid active ingredient is dissolved in solvent with emulsifiers, whereas an SC plant produces liquid crop protection products where a solid active ingredient is dissolved in water. ECs are one of the most common formulation types for crop protection products worldwide and SCs are growing in popularity due to benefits such as absence of dust, ease of use and effectiveness.)

2.  BENTON – PRODUCTION CAPACITY EXPANSION

Two new herbicide plants will be constructed, including one EC plant and one SC plant.

According to research by Fortune Business Insights and Grandview Research respectively, the global crop protection chemicals market is projected to grow from US$59,41 billion in 2021 to US$81,74 billion in 2028 at a compound annual growth rate (CAGR) of 4,66% and the US crop protection chemicals market is projected to grow at a CAGR of 3,8% for the next five years, with herbicides being the main contributor. There is also an increase in the number of farmers who are choosing cost-effective generics, and growth in this category is likely to surpass the market averages. AECI Schirm USA is a trusted supplier of generics and well-positioned to grow from this emerging trend.

“The USA is a major player in the global agriculture industry with over 913 million acres of cultivable land and natural farmland,” says Mark Dytor, AECI’s Chief Executive. “To ensure project success and reduce risk, we are investing in partnership with AECI Schirm USA’s strategic customers who are committed to shared growth in the long-term, which is the essence of AECI’s customer-centricity approach globally.

“These two strategic projects will strengthen AECI’s infrastructure base in the USA, particularly in terms of manufacturing and warehousing as well as managerial capacity, and support diversification of the geographical footprint for other Group businesses. Already in the USA, AECI Plant Health has 31 product registrations and AECI Specialty Chemicals has Henry® Company approval for bitumen emulsifiers. All this is in line with the Group’s strategy to continue expanding its global footprint and grow hard currency earnings.”

AECI is not new to the USA. The Group has wholly-owned AECI SANS Fibers, a leading producer of fibres and yarns for nylon and polyester sewing threads, in Stoneville, North Carolina since 2007. In addition, AECI has been a strategic investor in Origin Materials, the world’s leading carbon-negative materials company, in West Sacramento, California since 2017. In terms of the joint development agreement between the two companies, which was broadened in 2021, Origin Materials will supply AECI SANS Fibers with carbon-negative PET and next-generation polymers to be used in a wide range of end products in the future. This will increase the opportunity for new business from sustainable resources in the USA and beyond.

Issued by:

Lauren Winchester
T 010 823 2209 | C 083 421 9683
E lauren@epiphanybrandagency.co.za

For and on behalf of:

Fulvia Putero
T 011 806 8797 | C 082 800 3703
E fulvia.putero@aeciworld.com