Orica Limited · ASX:ORI
Orica — CLSA Investor Forum 2013
24 slides from Orica's conference presentation, September 2013
Slide 1: CLSA Investor Forum
CLSA Investor Forum September 2013 Ian Smith – Managing Director and CEO © Orica Limited Group
Slide 2: Disclaimer
Disclaimer Forward looking statements This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used a
Slide 3: Agenda: Introduction, Sustainability, Projects, Market Conditions
1. Introduction 2. Sustainability 3. Projects 4. Market Conditions 3
Slide 4: Vision and Values
Vision and Values Clever Resourceful Solutions Clever adjective skilful; talented; adroit; ingenious; quick to understand & learn Resourceful adjective full of resource; ingenious; skilful in overcoming difficulties No Accidents Today Succeed Through Collaboration Find Valuable Solutions It’s Our Bu
Slide 5: What We Are
What We Are 1. World’s largest provider of commercial explosives to mining and infrastructure markets with 28% global market share. 2. Largest supplier of chemical products to mining, water treatment and other industrial, food and cosmetics markets in Australia and New Zealand and a growing presence
Slide 6: Where We Are
Where We Are ~15,000 Employees Operations in 50 countries Customers in over 100 countries 6
Slide 7: Value Adding/extensive Strategy
Strategy Value Adding/extensive Strategic Imperatives Refine the customer value proposition Develop people capability & competence Refresh the capital spending program Drive common systems and processes Focus on performance metrics & targets Renew manufacturing reliability & integrity Orica Extend t
Slide 8: Geographic & Commodity Diversity
Geographic & Commodity Diversity • 90% of Group EBIT is generated 2012 Mining Services Revenue from mining related industries including quarrying and Q&C, 16% Coal - construction. Thermal, 30% • Broad mining exposure – from coal and iron ore to base and precious metals and diamonds. Other Metals, 27
Slide 9: Sustainability
1. Introduction 2. Sustainability 3. Projects 4. Market Conditions 9
Slide 10: Greenhouse Gas
Greenhouse Gas • The net cost of the Australian carbon tax to Orica is immaterial: - the cost of direct emissions is mostly offset through free permits allowed for Orica’s EITE (Emissions Intensive Trade Exposed) activities (AN, ammonia and caustic production). - installment of abatement at most nit
Slide 11: Mineral Carbonation
Mineral Carbonation • Carbon capture technology that permanently stores CO2 by reacting it with mineral silicates. • Orica is a partner in Mineral Carbonation International (MCi) with The University of Newcastle and GreenMag which aims to further develop carbon capture technology and build a pilot p
Slide 12: Licence To Operate
Licence To Operate Significant improvement in SHEC performance at major Kooragang Island and Yarwun Sustaining and Maintenance Capital1 manufacturing plants delivered through: $m 160 140 • Plant Improvement Initiatives 120 100 - ammonia plant upgrade and risk reduction activities at KI. 80 60 - upgr
Slide 13: Botany Mercury Remediation
Botany Mercury Remediation • Remediation works at Orica's former ChlorAlkali site at Botany have re-commenced. • Planned works will include excavation of contaminated soils and the construction of a vapour cap and barrier walls to contain any residual soil mercury contamination. • The work is expect
Slide 14: Projects
1. Introduction 2. Sustainability 3. Projects 4. Market Conditions 14
Slide 15: Burrup Ammonium Nitrate Project
Burrup Ammonium Nitrate Project • Investment in a 330ktpa capacity AN plant on the Burrup Peninsula, Western Australia, in joint venture with Yara and Apache (Orica share: 45%). • Unique project and capital structure - $110M entry fee - 45% of project capital - 100% marketing rights for all AN • Pro
Slide 16: Kooragang Island Capacity
Kooragang Island Capacity Issue Concept • Ammonium Nitrate (AN) demand in the • Increase AN production to 500ktpa by South East Australian market already investing in nitric acid import storage. exceeds production of AN at Kooragang • Deliver project by mid 2015. Island. Benefits • It is expected th
Slide 17: Bontang Ammonium Nitrate Plant
Bontang Ammonium Nitrate Plant • AN plant with capacity of ~ 300 ktpa located at Bontang, Indonesia. • Plant was commissioned in late 2012FY. • It is currently operating at name plate capacity on an annualised basis and product quality is within specification. • An export licence has been granted wh
Slide 18: Market Conditions
1. Introduction 2. Sustainability 3. Projects 4. Market Conditions 18
Slide 19: Sodium Cyanide Market Conditions
Sodium Cyanide Market Conditions 1. Volumes : 2013 sodium cyanide volumes at the end of August 2013 are up 4% on pcp. 2. Prices : have been stable to slightly up versus 2012. 3. Margins : have improved due to pricing and production performance at the Yarwun facility. 19
Slide 20: Product Pricing - Explosives
Product Pricing - Explosives Pricing for Contract Renewals • Globally – renewed contract prices in 2013 were on average flat compared to 2012 from a global perspective. This is after adjusting for the effects of Ammonia prices. • North America – pricing increased in USD terms. • Other regions – pric
Slide 21: Explosives Sales Volumes
Explosives1 Sales Volumes • Globally explosives are down 2% YoY at the end of August. • Emulsion tonnes have increased YoY – bulk emulsion volumes now represent 55% of total volumes, up from less than 50% in the prior year. • Volumes up in Australia Pacific (~ +6%) and EMEA (~ +12%). EMEA volumes dr
Slide 22: Product Differentiation
Product Differentiation Electronic Blasting Systems Volumes YTD 2013 versus 2012 AusPac +22% Asia +32% North America + 6% Latin America + 5% EMEA +26% GLOBAL +10% The ongoing movement to electronic detonators and emulsion products reinforces our strategic focus on product differentiation. 22
Slide 23: Contracts for Explosives
Contracts for Explosives Contract Renewal Profile for Explosives (October 2012 until the end of August 2013) % of Contract Revenue Retained at Re-Tender = 90 % % of Contract Revenue Lost at Re-Tender = 10 % For every $1 of contract revenue lost at re-tender we won in excess of $2 in new contract rev
Slide 24: Contracts for Explosives: Conclusions
Contracts for Explosives Conclusions 1. Volumes : 2013 volumes have been slightly down across most markets offset partly by the expansion of our contract base. 2. Price : current market conditions have limited our ability to lift the pricing of Ammonium Nitrate outside of North America. 3. Market Sh