Explosives giant says Biden could be the ‘circuit breaker’ to fix soured Australia-China relationship

Explosives giant Orica hopes US President-elect Joe Biden proves a ‘circuit breaker’ to the souring trade relationship between Australia and China.

Orica hopes incoming US President-elect Joe Biden will act as a “circuit breaker” to the souring trade relationship between Australia and China.

Mining explosives giant Orica hopes US President-elect Joe Biden will act as a “circuit breaker” to the souring trade relationship between Australia and China, which recently escalated to coal export bans.

At the company’s annual general meeting on Tuesday, chair Malcolm Broomhead said he was optimistic Mr Biden’s incoming administration would lead to a normalisation in global relations and de-escalate tensions between the West and China.

“I hope that this will act as a circuit breaker and lead to a rebalancing of international relations, particularly with China, that Australia can then leverage,” Mr Broomhead said in his opening statement.

Australia’s relationship with China hit rock-bottom this year following calls by the Morrison government to establish a global investigation into the origin of COVID-19.

China since then has placed crippling import tariffs on Australia’s wine and agricultural industries, and more recently, imposed bans on Australian thermal and metallurgical coal exports.

Orica chair Malcolm Broomhead said he is optimistic a normalisation in global relations will follow Mr Biden taking office. Picture: Aaron Francis/ The Australian

Chief executive Alberto Calderon also spoke of the need for a return to normalised trade relations with the world’s second largest economy, flagging concerns over the impacts bans will have on the resources sector, which supports the bulk of Orica’s mining blast operations.

“We are very concerned that all Australian exports of thermal and metallurgical coal to China are currently stopped,” Mr Calderon said.

“We hope that the government can quickly re-establish constructive dialogue, build understanding of the issues on both sides and begin the process of normalising relations.”

Last month, Orica posted a statutory net profit for the 12 months ending September 30 of $168m, down 31 per cent compared to the prior corresponding period.

Underlying earnings before interest and tax for the period was 9 per cent lower at $605m.

“Volumes in the first half were up four per cent, in line with our expectations,” Mr Calderon said.

“However, as COVID took a hold in the second half, they reduced and we ended up four per cent down across the year.”

Orica’s chief executive Alberto Calderon also spoke of the need for normalised relations. Picture: Supplied.

The company’s total dividend to shareholders for the 2020 financial year was down 22 cents to 16.5 cents per share and was slashed due to the uncertain operating conditions sparked by the global health crisis.

Mr Calderon said Orica’s capital had been bolstered by both a long-term US private placement bond issue and an equity raising in February.

“While COVID-19 means the year ahead cannot be predicted with any great certainty, the impacts are temporary, and we are in the best possible position to navigate through the coming financial year,” he said.

Orica said use of its BlastIQ technology trebled over the prior year and had been adopted on multiple sites globally.

It also said more than 1000 blasts at both underground and open cut mine sites had used its new Webgen wireless explosives technology.

Mr Calderon said the company was expecting a return on its technology investments of 15 per cent in the 2021 financial year.

The resources sector supports the bulk of Orica’s mining blast operations. Picture: Carla Gottgens/Bloomberg

Orica also used its AGM to reaffirm its commitments to reduce emissions by 40 per cent by the end of the decade and pledged further reduction in its exposure to thermal coal mining.

“We see great opportunity in the world’s move to a low carbon economy, not just in playing our part to help achieve global goals, but also in transforming our own operations and driving long term sustainability,” Mr Broomhead said.

He also noted no deaths were reported on blasting sites during the past financial year.

Shareholders overwhelmingly supported Mr Broomhead’s re-election to the board, with 99.93 per cent voting in favour.

John Beevers was elected as a new director, with 98.41 per cent of shareholders supporting his appointment.

A resolution on performance rights to Mr Calderon as part of his remuneration received a 17.7 per cent protest vote, but was not enough to stop the granting of shares under the company’s long-term incentive plan.

Originally published as Explosives giant says Biden could be the ‘circuit breaker’ to fix soured Australia-China relationship