Troubled explosives manufacturer records profit jump

Mining service and chemicals company Orica has today announced a half year profit increase to $267 million, up 6 per cent compared to the same time last year.

As a result of the $14 million increase the company has declared an interim dividend of 39 cents per share, franked at 15 cents.

The positive result has been attributed to the company’s move to increase its service offering and a shift towards improving manufacturing efficiencies.

But the company said its earnings before interest and tax were offset by weakening demand, pricing for ground support services, and higher depreciation costs.

Orica’s Mining Services division recorded a 5 per cent increase as a result of steady pricing for explosives and explosive related services as well as stronger demand for sodium cyanide which has risen 6 per cent.

Results for the company’s ground support offerings were adversely affected by weakening demand across all regions; as a result the operations in this division will be integrated, primarily into the Mining Services business by the end of this financial year.

The company said it expects net profit in 2013 to be higher than 2012, but did not give an exact figure and warned this prediction was subject to global economic conditions.

In the past 2 years Orica has had a number of spills and safety incidents, and has pled guilty to breaching its environmental protection licence.

Earlier this year Australian Mining reported an ammonia leak at Orica’s Kooragang Island plant which manufactures ammonium nitrate for mining.

 

The explosives manufacturer has in the past been charged with releasing chemicals into the NSW Hunter River.

 

At the time the Environmental Protection Agency alleged that ammonium nitrate was being discharged into the air across Kooragang Island and into the river.

The Koorang plant has been previously shut as a result of a number of chemical leaks, with increased levels of hexavalent chromium escaping from the plant's stacks.

 

It has also been reported that Orica inadvertently leaked 640 litres of contaminated waterfrom its Botany plant and failed to immediately notify the EPA.

 

The EPA at the time said the company was under no obligation to report the leak and that it had no environmental harm, despite a number of locals complaining of nausea and dizziness on the same day.

Late last year Orica was hit with a $432,000 fine after it pled guilty to charges of unauthorised water releases from its Gladstone facility.

 

The company was charged when traces of cyanide were discovered in water samples from a stormwater drain outside the Orica plant.

 

According to a spokesperson for the Department of Environment and Resource Management, the breach was not uncovered by Orica reporting it, but rather through proactive compliance checks by the department.