Miners Curbing Losses From Orica Plant Outage in Australia

Mining companies in Australia’s New South Wales state are working to minimize output losses after the shutdown of Orica Ltd. (ORI)’s Kooragang plant, which supplies about 80 percent of explosives to the state’s mining industry.

Companies are sourcing alternative supplies and modifying operations to prioritize areas that don’t require large amounts of explosives, New South Wales Minerals Council Acting Chief Executive Officer Sue-Ern Tan said in an e-mail today.

Orica, the world’s largest industrial explosives maker, is seeking alternative sources of supply for its customers after shutting down the ammonium nitrate plant on safety concern following a vapor release on Nov. 9. Rio Tinto Group (RIO) said some of its mines in the state have been affected and the London- based company is “working to manage that impact.”

A committee set up by the Office of Environment and Heritage said today it met with an independent expert to consider when the plant may resume.

“This puts us a step closer to a start up date but there are still a few important outstanding items that the committee is requiring Orica to address,” Greg Sullivan, chair of the committee considering the restart, said in a statement today.

The plant accounts for 85 percent of the total demand in the Hunter Valley, where most of the state’s coal mines are located, Tan said. Xstrata Plc (XTA), the world’s biggest exporter of thermal coal, said it is monitoring the situation as the company’s coal business in New South Wales continues to operate as normal.

Production Impact

“The plant shut down will have an impact on production due to the limited suppliers, strict regulations governing the storage of explosives on site and the fact that transport of explosives is tailored to the supplier,” Tan said.

Newcrest Mining Ltd. (NCM), which owns the state’s largest gold and copper operation in Cadia Valley, said the plant outage hasn’t affected operations at the moment.

The company is “considering contingencies if they are required further down the track,” Kerrina Watson, a spokeswoman for Newcrest said in an e-mail today, declining to be specific.

Separately, Newcrest today said it stopped mining at Cadia Hill because of a land slide caused by heavy rain.

To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net

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