2006 Year End Provision Update

20 September, 2006

Orica Limited today announced that a number of significant items will be recognised in the financial statements for the year ending 30 September 2006. These relate to progress in determining a solution for hazardous waste destruction, an ongoing commitment to environmental remediation, the closure of an ammonium nitrate production facility and the recognition of a provision for an unresolved tax dispute.

These significant items are in addition to those already disclosed this financial year, which include: the sale of IPL (approx A$400m post tax profit); Cockle Creek remediation (A$20m post tax); and Chemnet restructure (A$35m post tax). Further to this, as previously advised, Orica will be recognising an individually significant item relating to the acquisition and integration of Dyno Nobel.

HCB Waste

Orica is currently storing Hexachlorobenzene (HCB) waste at its Botany site (NSW) which was a by-product of solvents manufacture between 1963 and 1991. The existing provision of A$60m (pre tax) will not be adequate to deal with both the stored waste and the car park soil encapsulation.

This increased commitment of financial resources is further evidence of Orica’s determination to rectify the environmental issues at Botany. This is being done in a manner which is consistent with our approach of consulting with the local community, local, state and federal governments while using the best available technology.

Having unsuccessfully attempted to find a location to construct a facility in rural NSW, Orica has applied to the Federal Government to export the waste to existing licensed facilities in Germany.

At the Botany site there is also some soil contaminated with low levels of HCB and HCBD (Hexachlorobutadiene) encapsulated in a rubber liner beneath a car park which was constructed on the Botany site in 1980. After exploring various treatment options for this soil, it has been decided in consultation with the local community and authorities to treat the soil using an internationally proven and accepted process, Direct Thermal Desorption.

The estimated cost relating to the export of HCB and the treatment of the contaminated soil is expected to be A$49M (post tax). This additional amount will be disclosed as a significant item in the financial statements for the year ending 30 September 2006.

Once completed the HCB destruction will mean Orica no longer holds any HCB waste.

Villawood

A similar internationally proven and accepted thermal desorption process will also be used to treat contaminated soil at Orica’s non-operational Villawood site in western Sydney. The estimated cost of remediation after deducting estimated future sale proceeds is A$23M (post tax) and will be disclosed as a significant item in the financial statements for the year ending 30 September 2006. Once remediation is complete the site will be sold in line with Orica’s ongoing surplus property divestment program.

Seneca Plant

As part of optimising Orica’s North American operations it has been decided to close the Seneca Ammonium Nitrate (AN) plant.

Orica will continue to supply customer requirements for ammonium nitrate from its world scale AN facility in Alberta, Canada; from long term purchase and toll arrangements; and from its joint venture Ammonium Nitrate company, Geneva Nitrogen Inc. in Utah.

Estimated closure costs of A$9 million (post tax) and site remediation costs of A$22 million (post tax), after deducting estimated future sale proceeds, will be recognised as individually significant items in Orica’s financial statements for the year ending 30 September 2006. Once remediation is complete the site will be sold.

Crop Care

Orica’s Crop Care business was sold to Nufarm in October 2002. A tax dispute exists relating to proceeds received from Zeneca for the termination of Crop Care’s distribution agreement in March 2001. The dispute with the ATO relates to whether proceeds from termination of the agreement is on revenue or capital account.

Orica has paid half the tax in dispute but is unable to conclude whether this receivable is virtually certain and has chosen to write it off and raise a provision for the balance. An amount of A$16M (post tax) will be recognised as an individually significant item in Orica’s financial statements for the year ending 30 September 2006.

The raising of a provision does not impact the way Orica intends to defend this matter.

Further information is provided in Attachment 1.