11 November 2013 07:11 [Source: ICIS news]
BRISBANE (ICIS)--Australia’s Orica has posted a net profit after tax (NPAT) of Australian dollar (A$) 602m ($565m) for the year ended 30 September 2013, up by A$199m compared with the previous year, according to its full-year results released on Monday.?xml:namespace>
However, before taking into account individually material items, the explosives and chemicals producer’s NPAT was at A$602m, down from A$650m in the 2012 financial year.
The company said its strategy of “promoting product and service differentiation” led to an increased contribution from its mining services and products in the explosives market.
However, its global volumes of explosives were down by 2% because of reduced demand in the US coal markets and Latin America. Yet, this was partly offset by growth in the Pilbara iron ore region in Western Australia, the southeastern Australian coal markets as well as the emerging markets of Africa and Russia.
The decrease in earnings was also partly attributed to the commencement of production from the Bontang ammonium nitrate (AN) plant in Indonesia and the associated deprecation of full-year operations at the Kooragang Island ammonia plant in southeast Australia.
In the second half of 2013, the Bontang AN plant was nearing its nameplate capacity of 300,000 tonnes/year, with 58,000 tonnes exported to northwest Australia during Orica’s 2013 financial year.
In its announcement to the Australian Securities Exchange (ASX), Orica said its business development projects were focused on the expansion of the Kooragang Island plant and the construction of its Burrup joint venture in Pilbara. Orica owns s 45% stake in the Burrup project, with Norwegian chemical company Yara and oil exploration firm Apache holding the rest.
Orica plans to increase its Kooragang Island plant’s annual production to 500,000 tonnes from 430,000 tonnes at present by investing in nitric acid import storage at a cost of A$40m and would be delivered by 2015.
Orica’s annual report said AN demand in southeast Australia is exceeding production from Kooragang Island and a shortfall is forecast to exceed 100,000 tonnes/year during 2015. Further expansion of the Kooragang Island production site has been scheduled for the future and will see AN capacity of 750,000 tonnes/year.
Orica also announced on Monday it has entered into a three-year deal with BHP Billiton to supply the island’s total gas requirement of 49PJ (petajoules) from 1 January 2017 to 31 December 2019. Supply would be sourced from the Gippsland basin via ExxonMobil’s Longford processing plant.
Meanwhile, the 330,000 tonne/year Burrup project, which is 52% completed, will give Orica greater access to the Australian iron ore market. The plant is expected to be commissioned mid-to-late 2015, with nameplate production rates estimated by end-2016.
Shares in Orica on the ASX opened at A$20.70 and increased to A$21.63 at 16.45 ESDT, lifted by the positive results.
($1 = A$1.06)
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