Deer Park Land Sale and Business Updates

15 Feb 2024

Deer Park stage 1 surplus land sale finalised

Stage 1 of the sale of surplus land at Deer Park, Victoria to UniSuper has been completed for $260 million, with all sale conditions having been met and cash settlement completed on 14 February 2024. The sale includes approximately 66 hectares of surplus land, around half of Orica’s total surplus land holdings at Deer Park.

The sale will not affect the ongoing operations of Orica or its tenants on the bordering industrial precinct and will allow Orica to continue to focus on its core manufacturing and customer operations at Deer Park.

The net profit after tax from the sale is approximately $173 million and will be recognised as an individually significant item in H1 FY2024.

The remaining surplus land at the site (stage 2) is expected to be offered to the market in the future, pending the completion of remediation activities, securing approvals from relevant authorities, and supportive market conditions.

FY2024 performance to date

The momentum that underpinned Orica’s strong performance in FY2023 has continued into the first four months of FY2024, reflecting the continued execution of Orica’s strategy and strong demand for products and services across the mining value chain.

As a result, the outlook for H1 FY2024 EBIT from continuing operations has improved slightly from the outlook at the FY2023 results on 9 November 2023.

Orica Managing Director and CEO Sanjeev Gandhi said:

“The positive momentum from the second half of the 2023 financial year has continued as a direct result of our continued focus on executing our strategy, strong customer demand and increased earnings from new technology offerings. These efforts will be reflected in our financial performance for the first half of 2024, and we expect this momentum to continue through this financial year.

“While external challenges remain, we will continue to work hard to mitigate the impact of these on our business. Our prudent balance sheet positions us well to manage the volatile external environment and support further business growth, advancing climate change initiatives, and delivering improved shareholder returns.”

Turnarounds progressing to plan

As indicated at the FY2023 results, there are several major turnarounds in the first half of FY2024. These events are critical in maintaining safe and reliable manufacturing operations, high manufacturing utilisation and ensuring security of supply for Orica’s customers and the industry.

The first stage of Kooragang Island’s scheduled six-yearly major ammonia plant turnaround was successfully completed as planned, with the plant resuming normal operations in November 2023. The planned second stage has commenced and is scheduled to be completed by mid-March.

The first phase of Kooragang Island’s ammonium nitrate (AN) prill tower emission abatement installation was also successfully completed. The second and third phases will now be combined and completed in June 2024, reducing the impact on production. Following this turnaround, the prill tower abatement system will be fully operational, further improving the air quality emissions from the site.

At Yarwun, the nitric acid plant (NAP) 3 and ammonium nitrate 2 turnaround is planned for March 2024 for approximately 30 days. The tertiary abatement installation on NAP 1 and NAP 2 is also well-progressed, with completion expected in April and October respectively. The preparation for the planned turnaround at Carseland in late FY2024 is also progressing as expected.

Orica does not expect any impact on customer supply from these scheduled turnaround events.

Commenting on the progress of turnarounds, Mr Gandhi said: “Planned maintenance turnarounds ensure our manufacturing plants continue safe and reliable operations and utilisation remains high. The teams have done a fantastic job on our turnarounds so far this year, with each planned event completed safely, on time and within budget. Importantly, we have continued to ensure security of supply to our customers during the scheduled turnarounds.”

Expected completion of Terra Insights acquisition

Following the announcement of the acquisition of Terra Insights for CAD$505 millioni on 20 December 2023, relevant approvals and closing conditions are progressing as planned, and the acquisition is expected to be completed by the end of March 2024.

Terra Insights represents a complementary addition to Orica Digital Solutions and the successful GroundProbe™ business and allows Orica to establish a globally leading geotechnical and structural monitoring business.

Mr Gandhi said: “This strategic acquisition further strengthens Orica Digital Solutions and our GroundProbe business, adding additional products and capabilities across the mining and civil infrastructure value chains. We are excited about the medium to long-term opportunities this will create for Orica, our customers and our shareholders.”

i Subject to customary closing adjustments. Transaction value A$561m (CAD$505m hedged at 0.9000)

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