Roy Hill to end Incitec Pivot explosives contract

Incitec Pivot has lost its contract to supply explosives products and services to Pilbara iron ore miner Roy Hill.

The ASX-listed company has been informed by Roy Hill that when its current contract expires next month it will not be renewed.

Incitec Pivot said in an announcement that losing the Roy Hill contract would have an $81 million impact on the company’s net profit after tax (NPAT) up to the 2022 financial year.

“The NPAT impacts may be able to be mitigated to some extent by new commercial arrangements,” Incitec Pivot reported.

Incitec Pivot was also informed by BHP last month that it would no longer be the miner’s explosives supplier in the Pilbara from November this year.

The loss of that contract will have no impact on the company’s financial results in the 2018 and 2019 financial years.

Incitec Pivot will, however, incur net profit hits of $10 million in the 2020 financial year and $25 million in the 2021 financial year due to other contractual agreements.

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