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Johannesburg - African Oxygen (Afrox) [JSE:AFX] announced on Wednesday that it had retained two gas contracts with a combined value of R187m, sending the gas supplier's share price 5% higher.
The first one is the Massbuild LP Gas supply agreement - worth R130m - which has been obtained until September 2020. Massbuild operates four complementary brands, namely Builders Warehouse, Builders Express, Builders Superstore and Builders Trade Depot.
“Massbuild buys LPG exclusively from Afrox. The group views us as a strategic partner and we regard Massbuild as a strategic channel to market for our LPG, strengthening our brand equity,” said Afrox managing director Schalk Venter.
Afrox also retained a contract of R57m with the Beers Group.
Afrox has retained the De Beers contract for the supply of industrial and medical gases, welding consumables and bulk LPG for the next five years. The contract comes at the time when De Beers has invested R20bn in building an underground mine beneath the operating open pit Venetia operation.
The underground operation will begin production in 2021, continuing well into the 2040s, which will present Afrox with opportunities to grow the current portfolio.
“We are grateful to retain this business as it presents Afrox with an opportunity to leverage its capabilities to enhance the ongoing business relationship,” said Venter.
At 12:10 Afrox shares were changing hands at R13.65 a piece, an increase of 5% over the previous session's closing price.
