ORICA hopes to have its Kooragang Island ammonia plant back up and running by the end of the year after being forced into an extended shutdown after a toxic-gas leak in August.
The chemical and explosives supplier said the plant's inactivity due to a leak of carcinogenic hexavalent chromium that sparked outrage from residents and environmental groups had cost it $21 million so far.
But it did not stop the company from posting a net profit of $642.3 million for the year to September 30, beating consensus forecasts of $621 million.
"The company is working with authorities and the community to rebuild confidence in its operations and we expect to restart the plant later this calendar year," said chief executive Graeme Liebelt.
Orica's profit rose 3.8 per cent on the 2009-10 year, when excluding the effect of the demerger of the DuluxGroup paint business at the start of the financial year. Shares in Orica, the world's largest producer of explosives used in mining and construction, surged $1.11, or 4.6 per cent, to close at $25.41 yesterday.
Mr Liebelt said independent toxicology studies had concluded the leak, near Newcastle in New South Wales, posed no threat to human health. Design changes had been made to ensure no repeat of the incident, he said.
Orica will need approval from authorities, including an inter-departmental start-up committee, which meets today. A parliamentary inquiry involving NSW state politicians and company management begins next week.
Mr Liebelt, who has brought forward his retirement to March next year to accommodate the arrival of former Newcrest Mining boss Ian Smith, was upbeat about the company's prospects of profit growth next year. He said strong explosives demand from miners and volatility in currency markets were expected to settle down.
"I think we go into 2012 with reasonably good momentum," he said. "The key thing for us is that China continues to show reasonable growth."
Orica's performance was held back by a poor showing from its Minova underground mining chemicals business, hit by a price war in North America. Minova's earnings fell 29 per cent on the previous year to $105 million. With AGENCIES
Frequently Asked Questions about this Article…
What caused Orica's Kooragang Island ammonia plant to shut down and when might it restart?
The Kooragang Island ammonia plant was forced into an extended shutdown after a toxic-gas leak in August that released hexavalent chromium. Orica said it hopes to have the plant back up and running by the end of the calendar year, subject to regulatory approvals.
How much has Orica said the Kooragang Island shutdown has cost so far?
Orica reported the plant's inactivity has cost the company about $21 million so far.
What were Orica's recent full-year financial results and how did they compare with forecasts?
For the year to September 30, Orica posted a net profit of $642.3 million, beating consensus forecasts of $621 million. The company said profit rose 3.8% on the 2009–10 year when excluding the effect of the DuluxGroup paint business demerger at the start of the financial year.
How did the market react to Orica's profit result?
Orica's shares rose $1.11, or 4.6%, to close at $25.41 following the profit announcement.
Did independent studies find the toxic gas leak posed a threat to human health?
Orica said independent toxicology studies concluded the leak near Newcastle posed no threat to human health. The company also said design changes had been made to help ensure the incident is not repeated.
What regulatory steps does Orica need before restarting the ammonia plant?
Orica will need approval from authorities, including an inter-departmental start-up committee (which the company said meets to consider the restart). Separately, a parliamentary inquiry involving NSW state politicians and company management was scheduled to begin the following week.
Which Orica business units affected overall performance and why?
Orica's performance was weighed down by its Minova underground mining chemicals business, which was hit by a price war in North America; Minova's earnings fell 29% on the previous year to $105 million. At the same time, strong explosives demand from miners supported the company overall.
What did Orica's CEO say about the company's outlook and management changes?
CEO Graeme Liebelt said he was upbeat about prospects for profit growth, citing reasonable momentum heading into 2012 and the importance of continued growth in China. Liebelt also brought forward his retirement to March next year to accommodate the arrival of former Newcrest Mining boss Ian Smith.
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