Incitec Pivot’s contract to supply ammonium nitrate prill to BHP’s iron ore operations in the Pilbara will end in late 2019.
BHP has advised Incitec Pivot that it will no longer be its contracted supplier when the current agreement expires on November 28 2019.
The ASX-listed explosives company said there would be no financial impact for the company in the 2018 and 2019 financial years.
It will, however, incur net profit hits of $10 million in the 2020 financial year and $25 million in the 2021 financial year due to contractual agreements with a third-party supplier of ammonium nitrate prill in Western Australia.
Incitec Pivot said the net profit impacts are estimated based on expected input costs and could be mitigated to some extent by other commercial arrangements.