Orica chief executive Graeme Liebelt admits chemical leaks at its Newcastle site have seriously damaged the company’s reputation.
Several shareholders queried Orica’s response to the chemical spills at the company’s annual general meeting on Thursday. They asked why there was nine-day delay before a statement was released by Orica to the ASX, and why the board was not financially liable.
A leak of hexavalent chromium in August led to the closure of Orica’s ammonia plant at Kooragang Island, and a separate release of ammonium in November resulted in the closure of ammonium nitrate facilities.
At a cost of about $4 million per week, the closures have cost in the range of $40 million to $50 million this financial year so far, Mr Liebelt told the meeting.
“There’s a lot of damage to the reputation of the company in that local community particularly, and in NSW, that’s where it’s most intense,” Mr Liebelt told reporters after the meeting.
“I don’t know how to rectify that.
“The reality is we’ve just got to demonstrate a period of improved performance before that trust will be returned.”
The ammonia plant began a restart on Thursday following the lifting of a prevention notice by the New South Wales Environment Protection Authority.
Ammonium production at Kooragang Island resumed this week, and after a conservative start would be back at full production next week, Mr Liebelt said.
The leaks served as a wake-up call for the company, and an improvement in safety mechanisms and training made Orica confident a similar accident would not be repeated, he said.
Orica was also addressing the concerns about a lack of communication immediately after the leaks, Mr Liebelt said.
There have been no legal claims made against the company, he said.
Mr Liebelt also admitted that Orica’s previously strong reputation as a supplier of explosives to Hunter Valley coal miners had suffered as well.
The shutdown of the plants made conditions tight for all of Orica’s customers, including those in the food and beverage, health, agriculture and mining sectors.
“Of course it is disappointing,” Mr Liebelt said.
“We’re just determined to put these incidents behind us from the company’s point of view, in my remaining time.”
Mr Liebelt will retire on March 31 next year and will be replaced by former Newcrest Mining chief executive Ian Smith.
The meeting generated a sizeable protest vote of 20.3 per cent against the company’s remuneration policy for directors and senior managers.
Chairman Peter Duncan accepted the vote, which remained below the 25 per cent threshold that can trigger a board spill if recorded in two consecutive years.
Meanwhile, Mr Liebelt said demand for chemicals from the resources sector remained strong but demand from other sectors was more moderate.
“Our guidance remains the same – to make more profit in 2012 than 2011, subject to global financial conditions,” he said.
“Underlying demand, excluding Europe, is actually quite strong.”
Orica shares were down 24 cents, or 0.94 per cent, at $25.37.
