Wednesday 17th Jan, 2018

Orica boss forecasts good times for explosives

Photo: FMG
Photo: FMG

Explosives executive Alberto Calderon says the mining sector reached its “inflection point” in 2017, and has forecast good times ahead for explosives suppliers like Orica, the firm he leads.

In a lengthy interview with the AFR’s Matthew Stevens over the break, the Colombian executive – who has led Orica for four years – has reportedly said the mining sector’s obsession with cost cutting in recent years often led them to target easier-to-access ores.

But now the commodities sector has settled, somewhat, Calderon believes miners will have to get back on track, mining their tenements in a more logical way.

This means there will be plenty of overburden to be blasted away – an excellent prospect for the explosives supply sector.

“The good thing for the sector and for Orica is that after five years of being down and seeing only an obsession on costs, during the last 12 months we have seen miners and their impact on our demand hit an inflection point,” Calderon was quoted as saying in the Fairfax paper.

He reportedly believes miners moved “out of survival mode” in 2017.

“The story [prior to 2017] was survival – and survival means, even, destroying value. With all due respect to my main clients – I am not going to insult anybody, it is everybody – but the level of high grading and mine-life sterilisation was enormous,” Calderon reportedly said.

“Nobody really knows [the extent of this], but it is enormous … it was everywhere, in all the commodities; in Australia too, not just the rest of the world. They had to do it. It is what you do.

“But the impact is that mine plans were completely trashed.

“And, hence, obviously for us, the volumes of demand that we never though possible, that the impact on explosives was so much higher than the impact of the volumes of the commodities exported.

“So we are looking, three, four years ago, at the volumes of commodities exported and they were OK … but the volumes of [ammonium nitrate] – which means the volumes of waste moved – were dramatically reduced,” he reportedly continued.

“That helped [the miners] in the short run, but now they have to rebuild.

“And this will take years and years and we will be moving [overburden] almost permanently at a different level, because you don’t have optimal mine plans and change them and not have an impact.”