Orica Limited · ASX:ORI
Orica — Melbourne Mining Club (April 2013)
27 slides from Orica's conference presentation, Apr 11, 2013
Slide 1: Melbourne Mining Club
For personal use only Melbourne Mining Club 11th April 2013 Ian Smith - Managing Director and CEO © Orica Limited Group
Slide 2: Disclaimer
Disclaimer For personal use only 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
Slide 3: Global Leader in Mining Services
Global Leader in Mining Services For personal use only 1. World’s largest provider of commercial explosives to mining and infrastructure markets with 28% global market share 2. Global leader in the provision of ground support in mining and tunneling 3. Leading global supplier of cyanide for use in g
Slide 4: Australian Base - Global Footprint
Australian Base - Global Footprint For personal use only ~15,000 Employees Operations in 50 countries Customers in over 100 countries
Slide 5: Australian Base - Global Footprint
Australian Base - Global Footprint For personal use only 2012 Mining Services Revenue • 90% of Group EBIT is generated from mining related industries including quarrying and construction Q&C, 16% Coal - Thermal, 30% • Broad mining exposure – from coal and iron ore to base and precious metals and dia
Slide 6: Attractive Industry Fundamentals
Attractive Industry Fundamentals For personal use only • Long term growth in commodity volumes, driven by industrialisation and urbanisation • Declining ore grades and increasing strip ratios and ore-body complexity • Efficiency and productivity focus drives demand for game-changing technology, prod
Slide 7: Attractive Industry Fundamentals
Attractive Industry Fundamentals For personal use only Growth in Global Commodity Demand: 2010 - 2030 Nickel Copper Aluminium Zinc Lead Iron ore Coal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Change in global demand, 2010 - 2030 Source: ABARES, Deloitte Access Economics – Commissioned by Minerals Counc
Slide 8: Attractive Industry Fundamentals
Attractive Industry Fundamentals For personal use only Growth in Australia (1982 – 2011) 1,400 1,200 Ammonium Nitrate Demand 1,000 CAGR 9.0% Index (1982 = 100) 800 Iron Ore & Minerals Prod. 600 CAGR 5.8% 400 200 Coal Production CAGR 4.4% 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Slide 9: Attractive Industry Fundamentals
Attractive Industry Fundamentals For personal use only Gold Production and Ore Grades Cyanide Demand 120 1.8 180 Gold Production (Index: 2006=100) 160 100 1.7 140 80 1.6 120 100 60 1.5 80 40 1.4 60 40 20 1.3 20 0 1.2 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Global Gold Productio
Slide 10: Strategy
Strategy For personal use only Strategic Imperatives Differentiated Refine the customer value proposition services led Develop people capability & competence model Stabilise the capital spending program Differentiated Drive common systems and processes Focus on performance metrics & targets Renew ma
Slide 11: Initiatives Supporting Strategy
Initiatives Supporting Strategy For personal use only Slide 10
Slide 12: Orica's Ability to Build Margin
Orica’s Ability to Build Margin For personal use only 1. Structure Complete The new structure; with centralised functional support/services that assist the value chain steps of Research and Development, Manufacturing and Mining Services and Chemicals; will enable Orica to grow without the need to du
Slide 13: Structure and Sourcing
1. & 2. Structure and Sourcing For personal use only Ian Smith Chief Executive Officer Noel Meehan Andrew Larke Chief Financial Officer Global Head Strategy & Planning Eileen Burnett-Kant Craig Elkington Global Head Human Resources Global Head Mining Services Gavin Jackman Ron Douglas Global Head Co
Slide 14: Sourcing and Logistics
2. Sourcing and Logistics For personal use only Over 50% of our mining related EBIT is generated within the area shown in the adjacent map. Security and flexibility of supply is supported by: 1. Four large AN prill plants (post Burrup) 2. Numerous emulsion plants 3. Extensive storage capacity & loca
Slide 15: Manufacturing Excellence
3. Manufacturing Excellence For personal use only A deep dive has been performed into Kooragang Island operations • Operational and process improvements identified for the next 12 months • Plant improvements implemented to reduce the risk of major incidents Results already achieved include: • All ma
Slide 16: Value in Use: Accounts Won and Lost at Tender
4. Value in Use For personal use only Accounts Won and Lost at Tender October 2011 to September 2012 October 2012 to February 2013 1% 18% 26% 43% 44% Lost 42% 99% 82% 74% Won 57% 56% 58% Existing customer Competitor-held Green-field account Existing customer Competitor-held Green-field account accou
Slide 17: Value in Use: Customer Feedback for Going with Orica
4. Value in Use For personal use only Customer Feedback for Going with Orica October 2012 - January 2013 Product Differentiation 24% Customer Service / Supply 59% Price / Cost 17% Service, supply chain and product differentiation are the most important factors to our customers. Slide 16
Slide 18: Moving Towards Service Orientated Product Offering
4. Value in Use For personal use only Moving Towards Service Orientated Product Offering YTD 2013 versus Q4 FY 2012 30% 22% 20% 10% 6% Product 0% -10% On-site service Advanced blasting service -20% -30% -28% -40% Slide 17
Slide 19: Value in Use: Mine Site Conditions for Explosives Demand
4. Value in Use For personal use only Mine Site Conditions for Ongoing Growth in Demand for Explosives The energy used (% of total site consumption) in completing the following functions on a typical mine drilling / blasting ~ 2% excavation / hauling ~ 10 % grinding / crushing ~ 53 % Optimising the
Slide 20: Value in Use: Powder Factor Results
4. Value in Use For personal use only Soft Ore Bond Work Index (BWI) = 15 Hard Ore Bond Work Index (BWI) = 25 4x increase in powder factor results in 4x increase in powder factor results in • 40% increase in mill throughput • 28% increase in mill throughput • 33% reduction in mill energy • 23% reduc
Slide 21: Value in Use: Through Seam Blasting
4. Value in Use For personal use only Mines are facing increasingly frequent challenging geological formations Thin & Intermittent Splitting Faulted Dipping “Through Seam Blasting” provides a solution to these by: • Increasing the percentage of resource recovered • Reducing strip ratio • Providing t
Slide 22: Projects
For personal use only Projects Slide 21
Slide 23: Bontang Ammonium Nitrate Plant
Bontang Ammonium Nitrate Plant For personal use only • Indonesian plant commissioned with capacity of 300 - 330ktpa • Proven ability to manufacture to nameplate capacity and product quality within specification • Export licence received which will enable flexibility in the supply chain Proven abilit
Slide 24: HONCE Initiating Systems
HONCE Initiating Systems For personal use only • Construction is substantially complete with commissioning underway • Commissioning will occur progressively over the next 12 – 18 months • Total project cost expected to be within initial AUD estimates Initial production scheduled for 2013 Slide 23
Slide 25: Burrup JV
Burrup JV For personal use only Announced Iron Ore Production • NW Iron Ore = geographic & Increases commodity diversification North West Regions (mtpa) • Site earthworks and civils underway with late 2015 commissioning 900 • Unique project & capital structure that 15% CAGR 800 reduces capital risk:
Slide 26: Kooragang Island Expansion
Kooragang Island Expansion For personal use only • Project feasibility work is complete and all statutory planning approvals have been obtained • An engineering pathway for construction has been confirmed and a detailed technical appraisal has been presented to the Board • Most long lead items have
Slide 27: Unique Profile and Opportunities
Unique Profile and Opportunities For personal use only Profile • Global market leadership • Strong manufacturing position • Attractive industry fundamentals • Multiple growth opportunities • Ground breaking technology Opportunities • Growth in commodity volumes, driven by industrialisation and urban