Joint Orica and GAN Announcement - Ammonium Nitrate Joint Venture in Mexico

22nd July, 1998

Orica Limited (Orica) and Grupo Acerero del Norte S.A. de C.V. (GAN) today announced that they plan to form a joint venture in Mexico for the production and sale of ammonium nitrate.

All necessary approvals have been received from the relevant Mexican regulatory authorities.

This new joint venture, involving an investment by Orica in the order of US$25 Million will bring together GAN's existing 270,000 tonnes per annum ammonium nitrate manufacturing plant at Coatzacoalcos in the State of Veracruz, Mexico and Orica's existing 65,000 tonnes per annum ammonium nitrate plant at Monclova in the State of Coahuila, Mexico.

The Coatzacoalcos plant, owned and operated by GAN’s subsidiary Grupo Agromex is presently being modified, using Orica's proprietary technology, to enable production of industrial grade ammonium nitrate (IGAN), the principal raw material used in the manufacture of commercial explosives. This project, which will also expand production capacity to 360,000 tonnes per annum, is expected to be completed in the 1st Quarter of 1999. The Coatzacoalcos plant is connected by pipeline to its supplier of ammonia, the principal raw material for the manufacture of ammonium nitrate, and is located adjacent to a deep water port facility on the Pajaritos lagoon. These advantages make this plant the lowest cost manufacturer in the markets it will supply.

Orica will market the IGAN manufactured by the joint venture, principally in export markets in Central and South America and the Caribbean. Grupo Agromex will market the agricultural grade ammonium nitrate manufactured by the joint venture, principally in Mexico.

Peter Clinch, an Executive Director of Orica and CEO of the Orica Group’s international explosives business said "I am delighted to announce the joint venture we are forming with GAN. This strategic investment by Orica will underpin the future growth of Orica's Latin American explosives business."

Alonso Ancira, Vice Chairman and CEO of GAN said "This joint venture will add value to GAN's nitrogen products business. We are very much looking forward to working with Orica on this exciting new venture".

Both parties believe the joint venture will be a unique opportunity to bring together their ammonium nitrate manufacturing assets, technology and market position and the joint venture is expected to be the platform for growth of both parties’ businesses.

Orica Limited is a major Australian based chemical company with annual sales of approximately US$3bn and is the world’s largest supplier of commercial explosives.

Grupo Acerero del Norte is a major Mexican company with annual sales of approximately US$2bn. GAN's major businesses are steel, mining and nitrogen products.