Over the last two months, the explosives industry, together with other associated industries, has experienced severe challenges following the escalating global fuel prices, shortages of essential raw materials and large increases in demand for energy as economies start to recover from the pandemic. EPC-UK has been affected by the steep rises in price of wholesale natural gas; a product used to produce Ammonium Nitrate (AN), which is in turn used in the production of bulk emulsion matrix.
EPC-UK’s Managing Director, Ben Williams, provided Onsite with his valued appraisal of the UK market situation and gave an update on his recent collaboration with BEIS (The Department for Business, Energy and Industrial Strategy) and the MPA (Mineral Products Association). He explained that whilst the industry may not currently have the option of a ‘quick fix’, effective communications, combined with a galvanised approach to maintaining a continuous source of supply, enable his team to present a viable solution for the present:
Continuity of Supply
“Following the announcement that rising gas prices had forced the closure of our key AN supplier, CF Fertilisers, the UK Government agreed a short-term bail out to enable their Billingham plant to remain in operation – ensuring the continued supply of carbon dioxide, a by-product of their manufacturing process. This short-term intervention was for a period of three weeks. No mention was made during these discussions of the importance of the Billingham plant for agriculture or for the explosives industry. CF Industries has since agreed a further deal that will last until early 2022, averting another carbon dioxide crisis.
The result of all this uncertainty was huge increases in the price of AN and a possible disruption in the supply of our key raw material. EPC-UK, in conjunction with the MPA, made representations for the industry to the BEIS whilst implementing our business continuity plan to ensure that, whatever happened with the Billingham plant, our customers would still be supplied with bulk emulsion with AN sourced from elsewhere. However, this entails storing large quantities of AN at our manufacturing facility in Derbyshire. We are currently exploring more alternative suppliers and are working through a comprehensive technical management of change programme, enabling us to rely upon a secure, imported product moving forward.
The situation in Europe is equally dire, with large price increases in raw materials being experienced, not just on AN but on many blasting accessories due to the spiralling costs of product. This will undoubtably have a knock-on effect in the UK as we import many of these products.
Importations from outside the UK also bring additional complications and costs associated with import duty, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) regulations and, depending on specific sources, antidumping taxes”.
Successfully managing change
“We are confident that our management of change process will prove successful and deliver continued supply capabilities. However, it will require patience, commitment, and effective collaborations from our stakeholders. I recognise that it is a frustrating time for everyone within the industry and I have been extremely impressed with the pace at which our employees have responded to this latest, unprecedented situation. The efforts our teams made to maintain our production manufacturing and service levels were exemplary during the peak of the Covid-19 pandemic. Now, that resolution is being demonstrated once again and proving equally robust as we continue our dialogue with the BEIS and the MPA and anticipate the implementation of a positive longer-term solution, effectively supported by the UK Government.
Delivering as a team
In the meantime, holding true to our Spirit Values of Safety, Passion, Integrity, Respect, Innovation and Teamwork, our employees will continue to proactively communicate with our customers and will update them, together with suppliers and stakeholders accordingly.
I sincerely thank all our customers and partners for their continued support and understanding as we together navigate new and unparalleled situations within our industry and learn how to ensure that our businesses succeed in the future”.