Orica tipped as bidder for Chemours’ North American sodium cyanide business

New Orica chief executive Sanjeev Gandhi .

New Orica boss Sanjeev Gandhi could be plotting his first major move since taking control of the Australian explosives major, as speculation swirls Orica is a likely bidder for the mining services arm of US chemicals company Chemours.

Chemours is one of the biggest producers in North America of sodium cyanide, a key commodity needed to process gold and silver ore in the mining sector, and an area previously identified by Mr Gandhi as a possible area of expansion for Orica.

The company, which spun off from chemicals giant DuPont in 2015, put its mining services division on the market in March as it looks to slim down and focus on its core operations, which include production of its trademarked non-stick product Teflon.

According to a Bloomberg report, Orica could be one of a suite of companies in the bidding for the sodium cyanide operations, potentially valued at upwards of $US600m, along with private equity firms Littlejohn & Company and One Rock Capital.

However at that price, such a move could be a stretch for Orica without a significant capital raising, with the company reporting an earnings slump in the first half of its financial year as underlying earnings fell 51 per cent to $152m.

Orica had net debt of $1.73bn at the end of March, and a gearing ratio of 35.4 per cent – but said it had available liquidity of $1.9bn, including $869m in undrawn lending facilities and $989m in cash.

Its debt covenants prevent it from exceeding a gearing ratio of 57.5 per cent.

A spokesman for Orica said the company does not comment on market speculation.

“Orica takes a disciplined approach to continuously assessing opportunities in its core and growth engines, where the asset base, market dynamics and financial returns justify further investment and delivers value for the company’s shareholders,” he said.