Orica has put subsidiary Minova up for sale following hampered market conditions and the halving of overall earnings.
Minova specialises in ground control solutions for the mining, civil, geotechnical and construction industries.
Its total sales revenue for 2021 was $219.1 million, 17 per cent less than the $263 million it delivered in 2020.
According to Orica managing director and chief executive officer Sanjeev Gandhi, Minova is a non-core asset for the company.
“While Minova has delivered a substantially improved performance in recent times, it has been identified as non-core. Therefore, we will consider selling at an appropriate price,” he said.
Orica stated that tensions between Australia and China and a decline in the US coal market was to blame for the decline.
Australia and China’s strained relations resulted in a ban on Australian coal imports in China last year.
Orica stated that Minova has performed well despite the setbacks and its diversification into the infrastructure and hard rock mining markets.
Orica earned $152 million in the six months ended March 31, 2021, marking a 51 per cent decline from the previous corresponding period.
“Our first half financial results are in line with our February market update and reflect the impact of various market factors,” Gandhi said.
“As we detailed in the update, ongoing COVID-19 disruptions, geopolitical issues and unfavourable foreign exchange movements impacted us in the half.”
In May, China’s National Development and Reform Commission (NDRC) suspended economic communications with Australia, which further signalled Beijing’s transition away from Australian commodities.
More than 60 per cent of the world’s seaborne coal is from Australia, a Minerals Council of Australia report revealed.
“Metallurgical coal is a critical component for steel making and Australia’s quality attracts customers from around the world from Asian countries such as India, China, Japan, South Korea and Taiwan all the way to the EU (European Union),” MCA chief executive officer Tania Constable said.
Orica is the world’s largest commercial explosives provider with the mining industry as one of its key areas.