Mining conditions stabilising: Orica

Orica’s CEO says the sector appears to have reached an “inflection point”, but challenges remain.

Chairman Malcolm Broomhead told shareholders that there was still a long way to go before Orica’s financial performance is where it should be.

Explosives maker Orica says market conditions in the mining sector remain challenging in the current financial year, but conditions appear to be stabilising.

“Looking ahead, the 2017 financial year will continue to be challenged by operational headwinds,” Orica chief executive Alberto Calderon told shareholders at the company’s annual general meeting on Thursday.

“While the market is challenging now and in the short-to-medium-term, there seems to be some stabilisation.

“While I’m not prepared to call the bottom of the cycle, it does feel like the mining world has reached an inflection point.”

Orica’s fortunes are closely tied to the resources industry, which has recently benefited from a partial rebound in prices for key commodities such as iron ore, oil and coal.

Orica booked an annual profit of $343 million for the year to Sepember 30, a significant turnaround from a $1.27 billion loss a year earlier that followed a large asset writedown.

Orica chairman Malcolm Broomhead told shareholders that there was still a long way to go before Orica’s financial performance is where it should be, but he believed that the company had the right management and strategy to deliver improved results.

Mr Broomhead also noted the public’s lack of faith in big institutions - both government and business - since the global financial crisis in 2008, which manifested in the Brexit vote and the election of Donald Tump as US president. Mr Broomhead said many communities felt let down by business and government and wanted to retreat to an undefined, simpler world.

“In this context, it is important for business to get better at explaining our contribution and ensuring people understand that our standard of living relies on the contributions of industry,” Mr Broomhead said.

“In the absence of business taking a credible and genuine leadership position in this, the vacuum will be and is being filled by others.”

Mr Broomhead said there can be no wealth redistribution unless there is wealth creation first, and rises in living standards and quality of life had always been most successful in capitalist, free-enterprise economies.

Orica shares had edged 0.24 per cent higher to $16.81 by 2.07pm (AEDT).

AAP