Australian explosives maker Orica Ltd. would likely be the most affected of the country’s domestic ammonium nitrate (AN) industry players should an appeal fail against the Australian government’s decision not to renew antidumping tariffs on AN imports from the Russian Federation.
Jefferies Group LLC believes the efforts by a joint venture owned by mining giant Glencore and Yancoal to build an emulsion plant in the Hunter Valley in NSW, which would use AN imported from Russia, would present “a material threat” as it would lead to meaningful overcapacity” in the country, according to a Dow Jones report, citing the New York-headquartered investment bank and financial services company.
Jefferies said if the emulsion plant were to be built, it would directly impact the economics of the domestic AN industry, and Orica in particular.
Melbourne-based Orica, Perth-based Wesfarmers Ltd., and others launched an appeal against the government decision announced in June not to renew tariffs (GM June 25, p. 31). Wesfarmers, among other domestic producers, argued that Russian AN continues to benefit from low-cost natural gas subsidized by the Russian government, while Australian producers have been impacted by high domestic natural gas prices.
The antidumping duties have been in place since 2001, but Australia’s Minister for Industry, Science, and Technology Christian Porter signed off on the decision by the country’s Antidumping Commission that removed duties on AN from Russia.
The Commission had said it was not satisfied that the expiration of the measures would likely lead to any exports of Russian AN being exported to Australia at dumped prices. However, it did add that lower-priced AN would likely affect spot sales, which it said account for only five percent of the Australian AN market. It said it also accepted that low-priced imports would have some price effect on the contract examples provided by producer Orica Australia.
A decision on the appeal is due no later than Oct. 22.