Orica urges government to protect China ties, cut corporate tax

Explosives maker Orica has reminded the government of the importance of ties to China, amid tensions with Beijing.

Orica chief Alberto Calderon. Pic: Colin Murty

Explosives maker Orica has called for the federal government to be mindful of the nation’s trade relationship with China and says it is “vital” that corporate taxes here are cut.

Orica chairman Malcolm Broomhead’s comments to the company’s annual general meeting in Melbourne come amid tensions between Australia and China over foreign interference laws, and remarks by Turnbull government ministers that earned a rebuke from Beijing officials.

“It is important that we engage successfully with China, which will continue to grow as

the regional and global economic powerhouse,” said Mr Broomhead, who also sits on the BHP Billiton board.

“Australian companies can benefit enormously from this regional growth and can be helped by a good productive relationship at the government level.”

Separately, the Orica chairman said corporate taxes needed to be cut.

“As the US joins other nations with a significantly lower tax rate, it is vital that we follow so

that we continue to encourage the investment we need to underwrite the prosperity of future

generations of Australians,” he said.

In speeches filed with the stock exchange before the AGM, Orica chief Alberto Calderon upgraded production guidance.

“When we released our financial results, we gave guidance for our 2018 financial year that we

expect our global ammonium nitrate volumes to be around 3.65 million tonnes, plus or minus 5 per cent,” Mr Calderon said.

“Today, we expect to be around the upper end of that range.”

Shares plunged on November 6 when Orica (ORI) released its full-year results. Mr Calderon said at the time the company had been too conservative with its production guidance.

Today, he confirmed Orica had won a contract to supply BHP’s iron ore mines in Western Australia, which rival Incitec Pivot earlier this month announced it had lost, resulting in a forecast $34m net profit hit for Incitec in 2020 and 2021.

“This, combined with our existing customer contracts, means we expect the Burrup plant to be fully loaded from 2020,” Mr Calderon said.

He said things were looking positive for next financial year too.

“We are also optimistic for the 2019 fiscal year, which we expect will build on FY18 to deliver continued volume growth, more efficiency benefits as we continue to transform Orica, and a more stable pricing environment.”