Incitec loses contracts
INDUSTRIAL chemicals company Incitec Pivot has missed out on two contract renewals to supply explosives and services to Roy Hill and BHP Iron Ore operations.
In January the company notified the ASX it will cease to be Roy Hill’s contracted supplier on 9 February, less than a month after it announced BHP would not extend its contract to supply nitrate prill beyond 28 November 2019.
The Roy Hill contract loss was estimated to have a one off impact on Net Profit After Tax (NPAT) of about $5 million in FY18, $16m in FY19, $22m in FY20, $18m in FY21, $20m in FY22, and minimal impact beyond.
In addition, the BHP contract termination was estimated to have a $10m hit in FY20 and $25m impact in FY21.
“These NPAT impacts are estimated on the basis of expected input costs, and may be able to be mitigated to some extent by other commercial arrangements,” Incitec Pivot stated.
Media speculation has pegged Orica as a possible replacement contractor for both BHP and Roy Hill.
On 29 January, Incitec went public with an executive team restructure as Incitec Pivot Fertilisers (IPF) president and Asia Pacific president of Dyno Nobel Asia Pacific (DNAP) Simon Atkinson departed the company.
“As a consequence of Mr Atkinson’s departure, IPL has taken the opportunity to reassess the structure of its executive team,” Incitec said.
“This reassessment has resulted in the leadership of the DNAP and IPF businesses being separated.”
Greg Hayne will assume the role of DNAP president, and James Crough has been appointed IPF president in an interim capacity.
Two new executive roles have also been created; Robert Rounsley has been appointed chief technology development officer and will lead IPL’s global technology group for both the explosives and fertilisers businesses, and the new role of executive commercial officer will be taken up by Seth Hobby.
“These changes will enable each business to continue to effectively serve their customer base, focus on technology and innovation, and improve our agility in responding to market changes,” IPL managing director and chief executive Jeanne Johns said.
Incitec Pivot’s Roy Hill contract ends on 9 February.