Explosives supplier to separate businesses

In a statement, Orica explained that its decision was a result of a strategic review of its chemicals business.

“Orica’s two businesses, mining services and chemicals, are both market leaders in their respective industries and each business is exposed to different end markets, industry drivers and competitive dynamics. A separation of the businesses would allow Orica to focus on its core mining services activities and capitalise on its global leadership positions in commercial explosives, ground support and sodium cyanide,” the release explained.

The statement further explained that a demerger would mean that Orica Chemicals would be listed as a separate entity in the Australian Securities Exchange (ASX), with the company expecting it to benefit from the freedom to develop its own corporate strategy, capital structure and financial policies.

A demerger would be Orica’s “preferred approach” but a number of third parties have already expressed interest in acquiring the supplier’s chemical division, and in its release, Orica stated it would “consider any alternatives that are in the interests of shareholders”.

Impact on quarry industry
When asked how the development would affect the quarry industry, an Orica spokesperson told Quarry that it would be “business as usual”.

“The explosives sector will remain with Orica while the mining chemicals division of the company will be demerged along with the company’s general chemicals division,” the spokesperson explained. “However, in terms of service, availability and security of supply, there will be no change for customers in the quarrying industry.”

The spokesperson also reiterated that the quarry industry would likely see improvements in service as a result of the increased focus on each separate business. “The demerging of Orica’s mining and chemicals businesses will allow each sector to focus on its core skills and target markets, so we expect this will benefit all customers.”

An update on the proposed separation is scheduled to coincide with the company’s full year results announcement in November 2014.

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