On the heels of losing a major contract with BHP Iron Ore in 2019 (GM Dec. 8, 2017), Incitec Pivot Ltd., Southbank, Victoria, reported on Jan. 11 that it has been notified that its current contract with Roy Hill Iron Ore (Roy Hill) will expire on Feb. 9, 2018. IPL will cease to be Roy Hill’s contracted supplier of explosives products and services.
Regarding IPL’s contractual commitments with its third-party supplier of AN prill in Western Australia, in addition to the amounts announced on Dec. 6 per BHP, the loss of the Roy Hill contract is currently estimated to have a one-off impact on Net Profit After Tax (NPAT) of approximately A$5 million in FY18, $16 million in FY19, $22 million in FY20, $18 million in FY21, and $20 million in FY22, with minimal impact beyond FY22. These NPAT impacts may be able to be mitigated to some extent by new commercial arrangements.
Orica Ltd., East Melbourne, disclosed in December (GM Dec. 22, 2017) that it secured a new contract with BHP for the supply of AN from the new 330,000 mt/y Burrup AN plant in the Pilbara region of Western Australia beginning in Dec. 2019.