The Orica company anticipates a reduction of its profits in a range of between 70 million and 80 million Australian dollars due to various factors in the mining sector.
The indicator refers to earnings before interest and taxes in the first half of fiscal year 2021, which will culminate at the end of this month of March.
Headquartered in Australia, Orica is a multinational corporation and is one of the world’s largest suppliers of commercial explosives and blasting systems for the mining, quarrying, oil, gas and construction markets, a supplier of sodium cyanide for the extraction of gold and a specialized provider of ground support services in mining and tunnels.
As a first point, the company said in a report at the end of February, the trade tension between Australia and China is affecting demand in Orica’s higher margin Australian market for thermal coal.
In the first half of fiscal year 21, Orica expects the demand for its products and services from the affected mines to be approximately 60,000 tons of ammonium nitrate lower than in the corresponding prior period.
Another adverse aspect is the Covid-19 pandemic, a major source of uncertainty for Orica.
A third aspect corresponds to the activity in Colombia, which is significantly lower than in the previous corresponding period due to the temporary and permanent mine closures of the main clients.
Also in South America, ongoing social unrest in Peru and strikes in Chile have reduced the demand for products and services in those countries, and Covid-19 has caused an unfavorable but temporary shift in the product mix of customer demand in those countries.
Additionally, mining activity remains severely disrupted by the pandemic in several other regions, including parts of Europe, Africa and Mexico, where the virus has spread and its impacts are longer than Orica originally expected.
Indonesia has been hit by lower volumes due to the ongoing effects of Covid-19 and adverse weather.
At the same time, mining activity in Australia, the United States and Canada has remained largely resilient to the pandemic.