Orica Businessess Win Multi-Year Agreement to Support Rio Tinto Operations in North America

29th October, 1999

Orica's North American based businesses today signed Letters of Intent to enter into supply contracts with certain Rio Tinto Business Units located in the United States. The contracts will be for the supply of ammonium nitrate based products and, at certain operations, the delivery of these products down-the-hole. The initial term of these supply contracts will be three years, with provisions for an extension based on Orica's businesses successfully assisting Rio Tinto achieve certain performance targets.

The business was won on the basis of a competitive package that addressed Rio Tinto's need for a supplier capable of assisting the Business Units with lower overall explosives costs. Items such as efficiencies and cost improvements, technology application and research support for key mining improvement projects were important in the final evaluations.

In the Powder River Basin, the coal region including the States of North and South Dakota, Wyoming and Montana, Orica's joint bid with Nelson Brothers was successful, and the new Orica/Nelson Joint Venture will supply ammonium nitrate based products to Rio Tinto's wholly owned subsidiary, Kennecott Energy Company.

Orica's International Explosives CEO, Peter Clinch said: "We're working to re-position Orica's North American businesses to be the leading suppliers of explosives and next generation blasting systems to major customers in the largest commercial explosives market in the world".

Working with our partners in our new Powder River Basin Joint Venture, we have developed a program to help the Rio Tinto operations find ways to improve productivity and reduce total mining costs. This collaborative approach, unique in the North American explosives industry, will draw on the collective strengths of Orica, the Joint Venture, and Rio Tinto's own mining experts to deliver improved productivity and cost efficiencies for each Rio Tinto Business Unit."

Orica managing director and chief executive officer, Philip Weickhardt said: "Orica is the world's largest explosives company, with a strategy to become a global leader in Explosives by recognizing our customer's trend toward major consolidation. By aligning ourselves as an explosives partner with customers such as Rio Tinto, we create significant growth opportunities for Orica."

With the winning of this business in North America, Rio Tinto becomes a major international customer of the Orica Group. In August, it was announced that Orica had signed a three year agreement to supply a total product and service explosives package to 70% of Rio Tinto's Australian business units.