Oct 5 2004
Smorgon Steel Group Ltd. has acquired the operating assets of American Grinding Systems, LLC (AGS), located in Kansas City, USA, with effect from 1 October 2004.
Acquisition of the AGS assets, which have the capacity to produce a range of grinding media from 1.5 inch diameter up to 5.5 inch diameter, will increase Smorgon Steel's global capacity and increase its ability to efficiently service its customer base. Smorgon Steel currently produces approximately 180,000 tonnes of grinding media per annum.
In announcing the acquisition of the AGS assets, Smorgon Steel's CEO and Managing Director, Mr. Ray Horsburgh, said "We have developed a globally successful grinding media business from our existing base in Australia, servicing customers in Australia, Asia and North America. Until now, we have been unable to pursue all of the growth opportunities available to us because of the cost and logistics of supplying solely from an Australian production base and our production costs being denominated in Australian dollars."
Mr. Horsburgh continued "Acquisition of the AGS assets will enable us to better service our global customer base and to meet their growing demands for quality product."
AGS has sourced bar as feedstock for the manufacture of grinding media from Nucor and this arrangement will continue following the acquisition. The AGS assets will be incorporated into Smorgon Steel Grinding Media, part of Smorgon Steel's Reinforcing and Steel Products Division which is managed by divisional Chief Executive Mr. Neville Power.
"Following this acquisition and assuming continuation of current production levels, Smorgon Steel will have a global market share in grinding media of approximately 10%,", said Nev Power. "We have developed a major presence in this market based on the quality and reliability of our product", added Mr. Power, "and the quality of both the AGS assets and the key people who will join us from AGS will enhance our offer to the mining industry globally."
Ray Horsburgh concluded "We have previously indicated that our strategy for the Company is to expand into high value businesses based on our existing expertise and established customer relationships. The acquisition of the AGS assets, which will be funded from existing borrowing facilities, is the next step in the execution of that strategy."
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