ORICA LIMITED — Capital/Financing Update 2007

Sep 24, 2007

Attention ASX Company Announcements Platform Lodgement of Open Briefing[®]

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Orica Limited 1 Nicholson Street Melbourne Victoria 3000

Date of lodgement: 25-Sep-2007

Title: Open Briefing[®] . Orica Ltd. CEO on Excel Acquisition

Record of interview:

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Orica Limited yesterday announced the proposed US$670 million (A$775 million) acquisition of Excel Mining Systems, the leading US manufacturer and distributor of specialty bolts and accessories for strata support in underground mining. What’s the strategic rationale for the acquisition?

CEO Graeme Liebelt

We have a very positive view of the resources cycle and believe resources are going to continue to be in strong demand for a long period of time. With that in mind late last year we acquired the Minova business which came onto our books from early January.

The Excel acquisition builds on the Minova platform and plays into some of the same factors: the shift to underground mining, the growth in tunnelling, the increased use of safety products. Importantly, Excel has strong cash flow and the acquisition will be EPS positive in the first year. The products Excel provides are used in conjunction with Minova’s chemical strata control products in these areas. We think that combination is a strong proposition for customers of both Minova and Excel.

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What are the key drivers of value in the Excel business?

CEO Graeme Liebelt

First and foremost, Excel has very strong customer relationships. It has a very fast and effective service response time based on having plant locations close to its customer base. It also has strong and experienced management (who we

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will retain), long-term relationships with both customers and suppliers, and the lowest cost position based on the scale of its operation in the US. Excel’s is a strong business model.

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The acquisition price is equivalent to 9.9 times EBITDA for the last 12 months. This is higher than the multiple of 8.9 times EBITDA Orica paid for Minova. How do you justify the higher multiple?

CEO Graeme Liebelt

We’ve been very pleased with the Minova transaction, and compared with recent multiples in this area, the multiple we’re paying for Excel isn’t high. The multiple reflects Excel’s strong cash and EBITDA generation, and once we take into account the synergy benefits we’re looking for, the multiple is about 7.3 times. The transaction meets our stringent financial hurdles. All in all we think it’s a fair price.

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Orica’s investment criteria include achieving an IRR of at least 15 percent and RONA of at least 18 percent within three years of acquisition. What assumptions underlie your expectation the Excel transaction will meet these criteria?

CEO Graeme Liebelt

The assumptions we’ve used in our modelling have been that the underlying growth in the business will be reasonably steady, in line with the growth in underlying coal sector demand in the US over the next few years. In addition, we’re looking for synergies totalling approximately US$50 million (A$58 million) per annum by year three. The synergies include some cost synergies, some logistics synergies, and also take into account some taxation structuring benefits that will be realised in the transaction.

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Given US coal demand has been growing at only about 2 percent per annum, to what extent will future earnings growth in the US be restricted to the level of demand growth?

CEO Graeme Liebelt

US demand for coal is expected to continue to grow at about that rate. Our Excel investment case is based on steady, but relatively modest, growth in the US on an underlying basis, and of course synergies on top of that. That said, demand for Excel’s products tends to grow at a slightly higher rate than overall industry growth. That’s driven by the fact that mines are getting deeper and there’s an ever-increasing focus on safety, so the intensity of use of the types of products Excel and Minova provide is increasing as time goes by.

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Some of the 33 percent of the total synergies you expect to generate from expanding Excel will come from taking Excel’s products into new markets by leveraging Minova’s existing business platform. What’s the scale of the opportunity and which markets are most prospective?

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CEO Graeme Liebelt

The plan is to roll out Excel’s products into those markets where Minova already has a strong and usually leading position. The most interesting areas would be the Latin-American, Canadian, Russian, Chinese and Australian markets, although we won’t be focusing exclusively on those markets. The approach we’ll take in delivering those synergies will be like the one we took in our integration of the Dyno acquisition. That is, we’ll set up a separate and dedicated business development team, which will be focused on expanding the business beyond the US. This will be in addition to the team focused on delivering the US-based synergy and integration benefits.

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What level of investment will be required to expand the Excel business outside the US? What’s the competitive landscape outside the US?

CEO Graeme Liebelt

We’ve assumed the amount of capital expenditure required to expand outside the US will be in the order of US$20 million (A$23 million). There are competitors servicing these markets, but we think we’re going to be well positioned because the combination of Minova and Excel’s products should provide a powerful customer proposition. We have every reason to believe we’ll be successful.

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What’s your longer term strategy for the Minova-Excel underground business?

CEO Graeme Liebelt

We like the outlook for the resources sector generally and these businesses are very well positioned to capitalise on the shift to more underground mining and the greater focus on safety in most regions in the world. Our longer term strategy is to grow the business in each of the markets serviced by Minova and Excel and capitalise on the ability we now have to provide an integrated offering of both Minova’s chemical strata control products and Excel’s steel strata control products. We think that’s a powerful proposition and we’ll be seeking to exploit the integrated offering we’re now in a position to provide.

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The Excel acquisition will be funded from existing debt facilities, supplemented by an underwritten dividend reinvestment plan. Immediately after the transaction Orica will have an estimated net debt to debt plus equity of 49.5 percent, calculated under Standard & Poor’s methodology, up from 38.1 percent at the end of March 2007. This is above your target range of 35 to 45 percent. Given the lack of balance sheet capacity, can you continue to pursue further growth by acquisition in the shorter term?

CEO Graeme Liebelt

As we’ve previously said, we’re prepared to go outside our stated gearing range for a temporary period if we see an attractive opportunity. Excel is exactly that sort of opportunity, so we’re not too concerned that we’re temporarily out of our preferred range; indeed we expect to be back in our target range in the next 12 months or so. This will enable us to maintain our BBB+ rating and we’re committed to that.

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We believe the funding structure we’re putting forward strikes the right balance of preserving our rating and staying reasonably conservative. As and when further opportunities arise, we’ll treat those on their merits, and that includes looking at both the attractiveness of the opportunity and the funding options available to us at the time.

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Thank you Graeme.

For more information about Orica, visit www.orica.com or call Investor Relations Manager Stuart Hutton on (+61 3) 9665 7844

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