Orica’s chief in gas price warning

Orica CEO Sanjeev Gandhi says the country risks losing more manufacturing if soaring gas prices are not tamed as a matter of urgency.

Mr Gandhi, who on Thursday unveiled an increase in interim profit at the 150-year-old explosive and chemicals giant, said he had invested $1.5bn in overseas assets in the past six months rather than in Australia because of unsustainably high domestic gas prices.

Orica uses gas as a feedstock, rather than a fuel.

“None of that investment went into Australia, where gas prices have tripled in the last 10 years, while in the US they are at record lows,” Mr Gandhi said.

“All manufacturers in this country are struggling with energy costs and urgent action needs to be taken.”

Mr Gandhi warned last month that energy-intensive industries in Australia were “genuinely living on the brink” following the collapse of plastics manufacturer Qenos.

Confectionery and food giant Mars warned this week that Australia was one of the most expensive places in the world to manufacture food, with gas costs rising 106 per cent between 2022 and 2024.

Mr Gandhi said he welcomed the government’s new gas strategy that would lock in gas as a transition fuel in the move to renewables, but wanted to see more details.

He said more needed to be done to increase gas supply and reform gas price mechanisms, including the current cap. He pointed to the more favourable gas pricing regime in Western Australia, where Orica competes with Wesfarmers’ chemical operations.

WA requires LNG producers to take measures to ensure adequate supply of gas for local use, including by reserving 15 per cent of production from each WA export project for domestic gas consumption.

Orica this year sealed a deal to buy US-based cyanide manufacturer Cyanco for $640m to take advantage of lower gas prices in that country. Cyanco produces sodium cyanide used in gold extraction.

Orica shares rose 0.3 per cent to $18.36 on Thursday.