Orica is planning to sell its chemicals business in a deal worth up to $1 billion.
The sale will make Orica a pure play mining services company.
Orica is a member of Refrigerants Australia and according to its web site has been servicing the local market for over 15 years “offering high quality refrigerant gases at competitive prices.”
Orica is Australia’s largest supplier of industrial chemicals, as well as being Australia’s largest manufacturer and marketer of chlorine, caustic soda and associated chlor-alkali products.
In a statement released this week the company said it had completed a strategic review of its chemicals business.
“As a result of the review the Board of Orica intends to pursue the separation of the chemicals business either by demerger or sale. A separation of the businesses will 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.”
An Orica spokesperson said yesterday the company is planning a demerger rather than a sale option.
“We’re being very clear that it’s a demerger, but we are open to a sale if its better for shareholders,” the spokesperson said. A demerger would create a separate ASX listing for the chemicals business.
A split will allow the chemicals unit to “benefit from the freedom to develop its own corporate strategy, capital structure and financial policies,” Orica said.
The chemicals division has revenue of $1.2 billion and accounts for about eight per cent of group earnings with operations in Australia, New Zealand, Asia and Latin America.
In a statement to the ASX Orica said it has already received a “number of unsolicited enquiries from third parties expressing non-binding preliminary interest to acquire the chemicals division.”
Orica said it will retain ownership of its Port Botany facility plus it has offices in every state and territory of Australia, except South Australia.
Media reports said Orica is worth an estimated $8 billion and is the largest provider of commercial explosives and blasting systems to the mining and infrastructure markets, a global leader in the provision of ground support in mining and tunnelling, and a leading supplier of sodium cyanide for gold extraction.
“With an import distribution of more than 500,000 tonnes per year, we deliver a broad range of products and services at internationally competitive prices,” Orica said.
“Our fully integrated network means that we provide tailored solutions to meets our customers’ needs. The quality of Orica products and services is assured through certification against ISO 9001 and NSF standards.”
As well as undertaking a strategic review, Orica has cut 1000 jobs in the past year. Only last month the company announced major upgrades to its manufacturing facilities at Botany (Sydney) and Kooragang Island (Newcastle).
Orica’s executive global head of manufacturing, Richard Hoggard, said the company has invested more than $200 million over the last three years delivering the largest improvement and capital upgrade program in the KI facility’s 45-year history.
Works include a $20 million ammonia management improvement program and a $51 million upgrade of plant equipment.
Orica will give a further update on the proposed separation at its full year results announcement on November 19, 2014.