Orica pins hopes on core sector

The Australia-based Orica Ltd, which bought ICI India's 51 per cent stake in their joint venture Indian Explosives for A$23m (US$15m), expects new generation explosives and demand from construction business to drive growth in the coming years.

Malcolm Broomhead, CEO of Orica, currently on a visit to India to familiarise himself with the people and assets recently acquired in India, said Orica expected coal mining sector users such as Coal India Ltd to switch over to the highly efficient chip-controlled detonators to maximise returns from mines.

"Coal is experiencing a global revival and India is a major player", he said.

Orica's electronic detonators allowed precision blasting to an unprecedented degree, leading to minimal wastage, exposure of highly usable seams, reduction in overburden removal costs and lower costs.

"Trials with Coal India have been successfully completed and the acceptance of product should not be a problem", said Sanjay Dayal, Orica's manager for Asia.

The company has expanded capacity for the package explosives business at the Gomia plant in Bihar that it took over from ICI and there existed good scope for expansion of the initiating systems and detonators facility at the unit, Dayal said.

The complete, and fundamental, shift in explosives technology away from TNT and to ammonium nitrate-based products had thrown up new challenges but the Indian workforce had abundant skills to be globally competitive, Broomhead said.

"Orica is increasingly becoming a technology-based company and India is ideal as a production base for initiating systems and solutions", said Broomhead.

The construction sector solutions that Orica has on offer include applications in road-building, tunnelling, excavation and pipeline sectors, Broomhead added.

Orica products are ideal for hydro-electricity generation projects, which require precise tunnelling with minimal risk to life or property, Dayal added.

Both the senior executives would be visiting the Gomia plant to interact with employees to improve safety and productivity practices.

Ammonium nitrate, the new generation explosives raw material, was in short supply in the country and had to imported in bulk, said Dayal.

Ammonium nitrate prices had risen 20 per cent in the last 10 months on the back of very high demand from mining, steel and related sectors, and while explosives sales had grown strongly in terms of volumes, margins were under some pressure because the entire cost increase could not be passed on to customers, Dayal added.