Orica will pursue the separation of its chemicals business from its core mining services business, either by demerger or sale.
The company said in a statement that the separation of the businesses would allow Orica to focus on its core Mining Services activities and capitalise on its global leadership positions in commercial explosives, ground support and sodium cyanide.
Orica Chemicals is a leading supplier of chemical products to the mining, water treatment and other industrial, food and cosmetics markets in Australia, New Zealand with a growing presence in Asia and Latin America. Its annual revenue is approximately $1.2 billion. A demerger would create a separate ASX listing for the Chemicals business.
It is expected that Orica Chemicals would benefit from the freedom to develop its own corporate strategy, capital structure and financial policies appropriate for the business as a separately listed entity.
Orica said it had received a number of offers from parties looking to acquire the chemicals division. It added that, while the offers will be considered, its preferred option was demerger.
The company will give a further update on the proposed separation at its full year results announcement on 19 November 2014.
The possible sale of the chemicals business was flagged earlier this year, following Orica’s first fall in underlying profit since 2001.