Good morning, ladies and gentlemen, and welcome to Orica's 2023 Annual General Meeting. My name is Malcolm Broomhead, and I am your chairman. As today's meeting is being held in a hybrid format, I'd also like to extend a warm welcome to those shareholders who have chosen to join us online or by phone today. We do have a quorum present, so I declare the meeting open, and with your permission, I'll take the notice of meeting as read. I begin by acknowledging the traditional owners and the custodians of the land on which today's meeting is being held, the Wurundjeri people of the Kulin Nation, and I acknowledge all traditional custodians of the lands and waters on which Orica operates everywhere.
We pay our respects to elders past and present, for they hold a crucial role in passing on the traditions and cultural practices from one generation to another. For your safety, I'd like to draw your attention to the emergency exits, which are the doors through which you have entered and a number of doors which have the sign Exit on them. Should an emergency arise which requires an evacuation, please follow the emergency exit signs and the instructions of the Park Hyatt staff. And if you have a mobile phone, could you please ensure it's turned off? Better do that. And or is on silent for the duration of the meeting. I'd also like to highlight that the meeting is being recorded and will be available on the Orica website.
So now I'd like to introduce my fellow directors and your company secretary, and seated on my immediate right, your left, is Sanjeev Gandhi, your Managing Director and Chief Executive Officer, who will be presenting with me today. Next to Sanjeev is John Beevers, and then Karen Moses, then Gene Tilbrook, and on my far right is Denise Gibson. On my far left is Gordon Naylor. Next to Gordon is Vanessa Guthrie, and on my immediate left is Kirsten Anderson-Llewellyn, your Company Secretary. Both Mark Garrett and Vanessa Guthrie are seeking election for the first time at this meeting. Mark is unfortunately unable to join the meeting in person, but has taken the time to pre-record his speech in support of his election. Our executive committee are also here, and they are seated in the front two rows.
They'll be available after the meeting if there are any questions that you'd like to ask them. Our auditor, KPMG, is also in attendance, represented by our audit partner for the financial year 2023 reporting period, Mr. Gordon Sangster. And now, before we move on to the resolutions as outlined in the notice of meeting, I'd like to discuss some of the key topics of importance to Orica and to you, our valued shareholders. Starting with safety, our most important priority at Orica, always. Regretfully, earlier this month, we report an employee fatality in India after a traffic accident which occurred on a public road between a customer and site, and any workplace fatality has a devastating effect and a profound impact on all of us.
On behalf of the Orica Board, our thoughts and sympathies are with the affected families, their friends and their colleagues. A full and thorough investigation is still underway, and we will apply all of the learnings from this tragic accident across our sites anywhere in the world. We will continue our ongoing commitment and efforts to ensure the safety of our people, as we did during the 2023 financial year, in which we have reported 0 fatalities in that financial year and a reduction in our serious injury case rate. Moving now to performance. Orica's result in the 2023 financial year was our strongest financial performance in nine years, and pleasingly, we recorded an EBIT of AUD 698 million, a 24% increase on the prior corresponding period.
This strong result is due to strong customer demand, the ongoing successful execution of our strategy, and the remarkable efforts of our people, who continue to deliver on our strategy amid a volatile external environment. The final ordinary dividend of AUD 0.25 per share, unfranked, brings the total dividend payment to AUD 0.43 per share, representing a payout ratio of 53% of full year underlying earnings. And Sanjeev will speak about performance in more detail shortly. In addition to our strong financial performance, we have also recorded significant progress towards our sustainability targets. Sustainability is an integral part of our strategy and of our core purpose, and we continue to embed sustainability into our strategic, financial, and our operating decision-making processes.
The board and its committees have an annual program in place that covers key strategic, operational, oversight, and governance activities to enhance effectiveness in achieving our purpose and supporting our strategic decision making, and this includes sustainability and climate resilience. The board, as Safety and Sustainability Committee, chaired by Non-Executive Director John Beevers, oversees safety and sustainability-related issues, the ones that have strategic business and reputational implications for Orica and public disclosure and position statements, which includes our statements on climate change. We appreciate the deep interest that investors, employees, and shareholders, and indeed all stakeholders, have in our efforts to reduce our impact on the climate. We know that stakeholder expectations and material regulatory drivers for climate action are increasing, and we are working to actively improve our accountability and transparency.
I'm pleased that today we will give shareholders the opportunity to vote on a Say on Climate. This is a non-binding advisory vote. It's intended to provide an opportunity for shareholders to discuss and to provide feedback on the 2023 climate action report. The key focus of Orica's climate approach includes diversifying our customer and commodity portfolio by increasing revenue exposure to future-facing commodities, to Digital Solutions, to quarry and construction segments. Second, decarbonizing our operations with focus on four continuous manufacturing facilities that account for something like 95% of our global Scope 1 and 2 greenhouse gas emissions. Third, understanding and responding to the transition and physical impacts of climate change on our operations and our supply chain to build our organizational resilience.
Partnering for progress with Orica's employees, customers, and other stakeholders to address shared industry challenges and to decarbonize the value chain. And finally, applying oversight, coordination, and transparency to realize effective outcomes and strong corporate governance. I'll speak in more detail on the vote later in our meeting. Moving now to board succession planning. Our board succession planning is clearly critical to developing and supporting Orica's strategy, enabling us to discharge our responsibilities and to create long-term shareholder value. The skills, knowledge, experience, and diversity of your board are reviewed regularly to ensure they are aligned to our strategic objectives. And I'm pleased that we welcomed Mark Garrett and Vanessa Guthrie to the Orica Board as independent non-executive directors to support the board's objectives and Orica's long-term growth strategy.
Mark brings more than 30 years experience in commercial and senior leadership roles in the chemical industry across diverse global markets. Vanessa's considerable leadership experience in the resources sector spans over three decades, having held a diverse set of senior leadership roles across operations, environment, community, indigenous affairs, corporate development, and sustainability. We're delighted to have both Mark and Vanessa join our board and look forward to their ongoing contributions. Mark and Vanessa are seeking election by shareholders for the first time, as their appointment occurred since the last time we had an annual general meeting, and you'll have the opportunity to hear from them both later. I take this opportunity to inform you that Gene Tilbrook will retire from the board effective February 2024.
Gene's been a member of our board since August 2013, and I'd like to thank him for his service, his significant contribution towards the success of Orica. Finally, I'd like to comment briefly on recent media reporting on Australian corporates taking public positions on prominent social and community issues. Over past years, this has become much more common, with boards and management increasingly facing expectations from some stakeholder groups to declare themselves on social issues of the day. The Orica Board and management has consistently chosen not to do that, and I'd like to explain to shareholders why that is. We respect all our employees as equals, and thus we respect their ability to make up their own mind on social or political issues.
We think it would be inappropriate for us to imply that we're telling them in any way how to think about these matters, unless they particularly impinge on Orica's own set of core values. For example, in relation to the recent Voice referendum, we took the view that individuals vote, not boards or companies, and particularly where there's an issue that is a party political one, we don't believe it's in the company's, or indeed in the shareholders' interest to take one side against the other. Our directors, of course, are free to have their own individual views, provided that's as an individual rather than as the company. Furthermore, Orica is a global company, and we do not feel that taking a political position in one of our countries of operation would be appropriate.
Across Orica's global workforce, we're fortunate to have in place a highly talented and culturally diverse workplace, operating in over 100 markets and speaking more than 60 languages. Although headquartered here in Australia, we are genuinely multinational, and we believe that all of our people are smart enough to make their own minds up regarding important issues facing our communities and political issues leaders. As we mentioned elsewhere, we do, however, have schemes which promote minorities and further environmental and other goals within the company and throughout the world, and we do understand that the support of the communities in which we operate is vital. So instead of announcing an Orica position on a specific topical matter, we've clearly defined our core values of safety, achieving together, integrity, excellence, and respect.
Orica leadership is held to account consistently to model these values, and they're the behaviors that we expect from all of our Orica staff, regardless of circumstance, location, gender, race, or creed. Before I invite Sanjeev to speak, I'd like to thank our stakeholders, and on behalf of the Orica Board, we'd like to thank the entire Orica team for their ongoing dedication. It's been a very successful year in many ways, and it's also been a very busy year. Importantly, we thank our shareholders, our customers, and our industry partners for your continued support and investment in Orica. Proudly, in 2024, Orica will celebrate 150 years of operations.
Throughout the next year, we will recognize this exciting milestone globally with our stakeholders, and I look forward to celebrating with you as we reflect on our significant history while looking forward to a bright future of our iconic organization. I now welcome your Managing Director and Chief Executive Officer, Sanjeev Gandhi, to address you.
Thank you, Chair, and thank you to all our shareholders for joining us today. Wish you a very warm welcome. Starting with our number one priority, which is safety, as Malcolm shared, sadly, we reported a fatality due to a very tragic and unfortunate road accident in India earlier this month. We will complete the investigation into this incident and apply any learnings in accordance with our continued commitment to safety. In FY 2023, we saw a significant reduction in our serious injury case rate and no serious environmental incidents since 2018. Importantly, our loss of containment target has continued to decrease year on year, remaining significantly below our targets. We remain vigilant and strive for continuous improvement when it comes to safety of our people, customers, and the communities in which we operate. Our people are our most valuable asset.
This year, we've made significant progress on gender diversity, with nearly 35% of women in senior leadership roles. Continuing to improve this is an area of very strong focus. Fostering a strong culture of belonging is a key priority at Orica, and we continue working to ensure we have the right culture and environment to attract, retain, and develop a diverse and engaged workforce. Our high inclusion index score of 87% significantly outperforms global high-performance manufacturing and mining peers, but we know there's always more work to be done. Moving now to our performance. We delivered very strong results in the last financial year, reporting underlying Earnings Before Interest and Tax of AUD 698 million, a 24% increase on the prior year.
Statutory net profit after tax was AUD 295 million, including a AUD 73 million individual significant items expense after tax. We achieved a return on net operating assets of 12.6%, an increase on the prior year, driven by significantly improved earnings and strong market conditions. This very strong result is attributable to continued customer demand, strategy execution, and the remarkable effort of our talented people. The strength and flexibility of our global manufacturing and supply networks, combined with our Digital Solutions offerings, provides us with a significant key competitive advantage. Pleasingly, we saw growth in all regions and segments, including double earnings from our new Digital Solutions business year on year. In Australia, Pacific, and Asia, high demand for Orica's products and services together with continued commercial discipline, drove earnings performance and structural contract improvements.
Despite a challenging external environment, our North American business delivered very resilient earnings, with improved quality of earnings driven by strong EBS conversion, technology growth, commercial discipline, and cost management initiatives. In Latin America, underlying earnings were strong due to commercial discipline and continued technology adoptions, as demand for our technology, products and services and premium offerings continued to increase very strongly. Excitingly, our Lurin site is on track to be the major supplier of Orica's mining customers in both North America and Latin America. In the EMEA region, I'm very pleased with the significant EBIT improvement, despite the loss of volume and earnings from the Russian business last year. Excluding the impact of Russia, the region underlying earnings more than doubled. Finally, turning to Digital Solutions, of which this is the first full year of, results from the new segment.
The business has been very strong, doubling their earnings in 2023, with significant improvements in margin. This was driven by growth across all the three sub verticals, namely Oreb ody Intelligence, or OBI, is how we define this within Orica. Blast Design and Execution, or BDE. And the GroundProbe Monitoring business. The integration of Axis, which we acquired last year, is progressing to plan. Axis has now entered new markets in Canada, Africa, and the U.S. The Digital Solutions business has been identified as a very key growth vertical, and we will continue to build and invest in the next generation of technologies and solutions, along with innovating in our blasting core business.
We have launched more than 20 new blasting and digital products this year and announced significant partnerships, including a recently announced MoU with Caterpillar, an award-winning Avatel technology with Epiroc, and these are domain experts in their own rights. Sustainability is at the core of our purpose, and we have made strong progress towards the climate targets throughout the year. We have invested responsibly to deliver significant reductions in our operational net Scope 1 and Scope 2 greenhouse gas emissions to date. In 2023, our Scope 1 and 2 net emissions were 9% lower than 2022, and since 2019, which is the baseline year, we have reduced our net emissions by 22%. Due to our strong sustainability performance, earlier in 2023, we had the confidence to accelerate our climate targets.
We have now introduced a new short-term target to reduce our net Scope 1 and 2 emissions by 30% by 2026 from 2019 baseline levels. Importantly, we've increased our target to reduce the Scope 1 and 2 emissions by at least 45% by 2030 from 2019 levels. Finally, we realize Scope 3 is a material portion of our overall emissions profile, and we have introduced a new ambition to reduce Scope 3 emissions by 25% by 2035 from 2022 levels. Critically, these accelerated targets and new ambition further support our long-term ambition to achieve Net Zero emissions latest by 2050. The energy transition requires careful planning and policy coordination between governments, regulators, energy suppliers, consumers, and the broader private sector.
I've spoken in detail about my support for a Carbon Border Adjustment Mechanism, and we are pleased that consultation on the CBAM has begun with federal government. We will continue to advocate for this introduction. We believe a CBAM will ensure a level playing field and avoid unfair competition with imported products into Australia from countries with less mature carbon pricing regimes and ensure sovereign manufacturing remains competitive onshore in Australia. In our case, a CBAM will deliver on the needs of Australia's resources and agricultural sectors, as well as the jobs and economies that rely on them. We would like to see an Australian CBAM include ammonia and hydrogen and derivatives, such as ammonium nitrate, as it does in the EU CBAM already today. There are presently carbon leakage risks associated with ammonium nitrate due to the difference in emission reduction policies between Australia and key trading partners overseas.
As I shared with you at our recent full year results, there are several substantial factory turnarounds scheduled in FY 2024, particularly in the first half of this financial year. One of the major turnarounds is the once-in-a-six-year regulatory ammonia plant maintenance shutdown at Kooragang Island, ensuring that we maintain safe and reliable manufacturing operations, and that our manufacturing utilization remains high, and we maintain security of supply for our customers and the industry. I'm very happy to share with you that the first stage of the Kooragang Island ammonia plant turnaround has been successfully completed, safely, on budget, and on time. During the shutdown, the ammonia plant was modified to enable its future connection to the pipeline that will supply renewable hydrogen from the proposed Hunter Valley Hydrogen Hub to Orica.
Stage two of the turnaround will commence in February 2024 and is scheduled to take approximately 4 weeks. Importantly, we have not had any unexpected impacts on customer supply during these turnaround events. As always, we do not let our customers down. Now, turning to outlook for FY 2024. As anticipated, the positive momentum from the second half of FY 2023 financial year has continued, with the first 2 months of this year delivering strong results. We expect that this momentum to continue, will continue throughout this new financial year. We remain deeply committed to the continued execution of our strategy. As a result of our commercial discipline, strong customer demand, and increased earnings from our technology offerings, the strength of our underlying business is expected to continue.
While external challenges remain, we will continue to work hard to mitigate the impact of these on our business globally. Our prudent balance sheet position positions us very well to manage the volatile, volatile external environment, supporting further business growth, advancing climate change initiatives, and delivering improved shareholder returns. We will also continue our disciplined approach to organic and inorganic growth opportunities. To conclude, I'm extremely proud that in 2024, Orica will celebrate 150 years of operations. Founded in 1874 as a supplier of explosives to the Victorian Goldf ields in Australia, Orica has grown to become a leading, publicly owned company, listed in the Australian Securities Exchange, operating across more than 100 countries around the world. A true global multinational, born in Australia. The executive committee and I are extremely proud of the entire Orica team and what they have delivered this year.
Thank you to our customers, partners, and the communities in which we operate for your ongoing support. Finally, thank you to you, our shareholders, for your continued support and investment and trust in Orica. I invite the Chair now to begin the formal items of the business.
Thank you, Sanjeev. Before commencing the formal part of the meeting, I just want to cover some important procedural and technical matters. This is a shareholders' meeting, and only shareholders and their proxies, attorneys, and authorized corporate representatives may participate in this meeting. If you wish to submit a question or comment, please ensure they are relevant to the matters before the meeting and, and to shareholders as a whole. If a shareholder has a detailed question about the operations of the company, or a question which appears to be more relevant to the shareholder's own circumstances, that question can be dealt with by the management following the meeting. In terms of how questions will be managed today, I'll introduce each item of business separately and then invite questions on all items of business together after all the items have been introduced.
I'll invite questions from the floor, followed by written questions, which will be relayed to me by Delphine Cassidy, Orica's Chief Communications Officer. And finally, I'll take any telephone questions. For those shareholders in the room here today, you'll note that there are two fixed microphones on either side of the room. And I'd invite questions, when I invite questions later in the meeting, would you please make your way to the nearest microphone? Give your name to the microphone attendant. If you're attending the meeting online, written questions can be submitted at any time, and to help with the efficient running of the meeting, I'll encourage you to do so as soon as possible. Please click the Ask a Question button and follow the instructions.
Questions submitted online may be moderated and summarized, particularly if there are questions on a similar topic or which have already been answered during the in-person Q&A. However, we'll endeavor to make sure that we broadly cover the issues that shareholders have raised. Any question or comment submitted that we consider to be defamatory or containing offensive language will not be read out or responded to. And if your question is asked on behalf of a particular group or organization, and you'd like to make that known, please include that in your question. For shareholders joining us on the webcast, the Virtual Meeting Online Guide, which is available on both the Orica website and the online platform, includes all the information you need about how to participate in today's meeting.
If you have any trouble using the online platform, please refer to the guide or call the phone number shown on the screen for assistance. I thank you for adhering to these procedures. Finally, in the event that we have a technological difficulty during the meeting, we may need to take a short break. If any online attendees encounter technical difficulties, the webcast will be available on our website after the meeting. As indicated in the notice of meeting, each resolution will be declared on a poll, and to allow everyone attending the meeting to have ample opportunity to cast their vote, I now open the polls in respect of all the motions that shareholders will vote on today.
A number of our shareholders are not able to join our meeting today, but have taken the time to send us their direct votes or their proxies in advance of the meeting. To ensure that all shareholders who have voted directly or lodged proxy votes in advance of the meeting to have their views known, the number of direct and proxy votes received will be shown on the screen after I present each item of business. In relation to open proxies received for the Chairman, they've been voted in favor of all resolutions. I appoint Julie Stokes of Link Market Services Limited, the company's share register who have examined and prepared the summaries of the direct and proxy votes received, to act as Returning Officer for the poll. Please also note that you are...
If you are a proxy holder, attorney, or nominee, and your appointer has directed how you should vote on any item, then you must follow that direction. I now move to the formal part of the meeting. The first item is ordinary business, of ordinary business, rather, is to receive and consider the financial report, the directors' report, and the auditors' report for the year ended thirtieth of September 2023. As a reminder, I will invite questions on all resolutions after all of the items of business have been introduced.
So if we move on then to the election of directors, we have 4 directors seeking election today, being the election, as I've mentioned, of Mr. Mark Garrett and Dr. Vanessa Guthrie, the re-election of John Beevers for a further 3-year term, and my re-election as a director for a further 3-year term. Resolution 2.1 in the notice of meeting deals with my re-election as a director, and before that resolution is put to a vote, I'll hand over to Gene Tilbrook, who is Chair of our Board Audit and Risk Committee, to assume the role of Chair of the meeting for that resolution. Before I hand over to Gene, I'd just like to say a few words to support my re-election.
My executive life started as a civil engineer, and I worked in both the UK and the Middle East before returning to join the mining industry here in Australia. Over this time, I've held a range of senior executive positions, including chief financial officer and executive director of operations, and then managing director and CEO at North Limited, an international diversified miner, before coming to Orica as CEO from 2001 to 2005. In recent years, I've pursued a career as a non-executive director, and as well as returning to Orica as non-executive director in December 2015, and appointed as your Chair in January 2016. I was, until recently, director of BHP Group and was the former Chairman of Asciano Limited.
I'm also a director of the Walter and Eliza Hall Institute, a not-for-profit medical research organization. I seek your support today for my re-election as a director, and I now pass over to Gene to chair this part of the meeting.
Resolution 2.1 in the notice of meeting seeks the re-election of Malcolm Broomhead as a director. Malcolm was appointed an independent non-executive director in December 2015, and Chairman of the company since January 2016. In accordance with the constitution of the company, Malcolm retires, and being eligible, offers himself for re-election. Malcolm is one of Australia's most experienced chairman and non-executive directors and has extensive experience in industrial and mining companies globally. He brings to the board a deep understanding of the mining and mining services sectors in which Orica operates. As CEO of Orica from 2001 to 2005, and as a non-executive director of BHP, a role he held from 2010 until 2022. My fellow directors and I believe Malcolm continues to provide strong leadership of the Orica Board and support his re-election.
Malcolm abstains from voting his own shares on this resolution. Results of direct and proxy votes received in respect of the resolution are now displayed on the screen. I will now hand back to Mr. Broomhead, who will continue to chair the meeting.
Thank you, Gene. Resolution 2.2 in the notice of meeting seeks the re-election of John Beevers as a director. John was appointed as a non-executive director of the company on the first of February 2020, and in accordance with the constitution of the company, John retires, and being eligible offers himself for re-election. John is chair of the Safety and Sustainability Committee and a member of the Innovation and Technology Committee, as well as the Nominations Committee. Having worked for the Orica Group over a course of 27 years, including in a number of senior executive positions, John's deep insight and operational expertise in Orica's core business are of tremendous value to the company.
John was also the chief executive of GroundProbe, a global technology leader in the mining industry, prior to its acquisition by Orica, and his strong expertise in this area is highly beneficial in executing, Orica's technology solutions strategy. The board, with John abstaining, supports John's re-election, and I'll now invite John to say a few words in support of his election.
Thanks, Malcolm, and good morning, everyone. I'm very pleased to be with you today and thank you so much everyone for joining us. First of all, I'd like to recognize and thank Sanjeev, the executive team, and all of the staff at Orica for their commitment and their helpful insights. I was appointed to the board in 2020, and over the last three years I've been a member of the Innovation and Technology Committee, firmly focused on building and accelerating commercialization of new disruptive technologies. The growth, for example, of the digital business is particularly notable and is a key strategy for the future of Orica.... I've also been a member of the Safety and Sustainability Committee, and this year assumed the role of chair from Karen Moses, whom has adeptly led it, and now chairs the People and Remuneration Committee.
With around 12,500 employees around the globe, it's clear that our prime focus is to ensure the safety of our employees and the communities in which we operate. As Sanjeev just mentioned, an investigation has commenced following the tragic death of one of our colleagues, fatally injured in a travel accident on a public road earlier this month. We will take the findings and learnings from this tragic event and share them with all our employees. We've also had particularly strong focus on the sustainability of our business, including decarbonization projects. While good progress in delivering meaningful change has been made, we acknowledge there is still much to do. I also serve on the boards of Lynas and Syrah, both of which are complementary to our work at Orica.
In addition, my history at Orica and my operational and management expertise and experience enables me to bring a unique perspective to the board and the business. It's been a privilege to work with this board and management team, and if I gain your support to continue on the board, I look forward to working with them and continuing to grow your business. Thank you for the opportunity to address you today.
Thank you, John. Our results of direct and proxy votes received in respect of the resolution are now displayed on the screen. Resolution 2.3 of the notice of meeting seeks the election of Mark Garrett as director. Mark was appointed as a non-executive director of the company on the 15th of January, 2023, and in accordance with the constitution, Mark retires and being eligible, offers himself for election. Mark is currently a member of the Innovation and Technology Committee and the Nominations Committee. Mark is an experienced business leader with a career spanning over 30 years within the chemical and energy sectors, and in a range of commercial and senior leadership roles.
His strong track record in driving growth, productivity, and efficiencies within diverse global markets, including the Asia-Pacific, Europe, United States, and Middle East areas, complements the board and the strategy of the company. And the board, with Mark abstaining, supports Mark's election. I'll now play his prerecorded video.
Thank you, Malcolm, and good morning, everyone. I wish to formally offer my services as a director on the Orica Board. I am an almost unknown entity in Australia, having left the country after completing my studies at the University of Melbourne and what was then known as RMIT. So let me take this opportunity to introduce myself. I have worked almost my entire career in the chemicals and materials space with some of the most famous names in the industry, starting with Ciba-Geigy, then DuPont, Borealis, and culminating as chairman of OMV AG, Austria's largest company, which had EUR 62 billion in sales and an operating profit of around EUR 10 billion when I stepped down at the last AGM, end of May 2023.
Currently, I focus on private equity projects, our family office, and a board seat at Umicore, one of the world's leaders in organometallic chemistry and a frontrunner in rechargeable battery materials. For me, Orica represents a wonderful opportunity to reconnect with business in Australia and help support a global Australian company with my contacts in Europe and the United States. So far, I've been really impressed with the quality of the company and the people in it. If elected, I believe I can help Orica further its global aspirations, and therefore, I offer myself for election. Thank you.
Results of direct and proxy votes received in respect of the resolution are now displayed on the screen. Resolution 2.4 of the notice of meeting seeks the re-election of Vanessa Guthrie as a director. Vanessa was appointed a non-executive director of the company on the first of February, 2023, and in accordance with the constitution of the company, Vanessa retires, and being eligible, offers herself for election. Vanessa is a member of the Safety and Sustainability Committee, the People and Remuneration, and the Nominations Committee. Vanessa has considerable senior leadership experience across the resources sector, having held a diverse set of roles over the past 30 years across operations, environment, community, indigenous affairs, and corporate development and sustainability.
Her deep understanding of geology, the environment, and management of natural resources supports the board's objectives and long-term growth strategy for the company. The board, with Vanessa abstaining, supports Vanessa's election, and I now invite Vanessa to speak in support of her election.
... Thank you, Malcolm, and good morning, everyone. It has been a privilege to be part of the Orica Board since February 2023, and I now formally offer myself as a director to the Orica Board. I've worked in the mining and oil and gas industries for over 35 years, both as an executive and as a director on boards. Most of my roles, as you've heard, have been in operations and sustainability in a variety of commodities and companies, including both underground and open cut operations. I moved to a non-executive director career in 2016 after leading Toro Energy as managing director through the exploration and development cycle.
Through my diverse executive career, I've gained a deep understanding of Orica's customer expectations, including detailed knowledge of the value chain from exploration and resource identification through mining, extraction, and mineral processing, to commodity markets and emerging technologies for productivity enhancement and growth. Importantly, with today's changing community expectations, I've extensive experience in sustainable development, including environmental management, social impact, and climate change response. I'm keen to bring this experience to Orica's sustainability commitments and net zero ambitions. I currently serve as non-executive director on the boards of Santos, Lynas Rare Earths, and Tronox Holdings PLC, as well as Infrastructure Australia, and I am the Pro-Chancellor of Curtin University in Western Australia. These roles provide me with excellent exposure to the mining and resources sector, who are our major customers, as well as the issues that drive our industry's performance.
I commit to you, our shareholders, that I have the time, the energy, and the commitment to dedicate to Orica's continued success in both delivering to meet our current customers' needs, as well as growing our company. I will work hard to support Orica in the execution of its exciting strategy and to bring a deeper understanding of our customers' needs to aid Orica in executing its growth program. Thank you for the opportunity to address you today.
Thank you, Vanessa, and results of the direct and proxy votes received in respect of this resolution are now displayed on the screen. Resolution three in the notice of meeting is to adopt the remuneration report for the year ended 30 September 2023, and the remuneration report is found on pages 86 to 110 of the annual report. As you'll be aware, the vote on this item is advisory only and does not bind the company or the directors who remain responsible for the remuneration policy of the group. However, the board does take into account feedback from our shareholders, including the discussion and vote on this resolution when considering future remuneration strategy.
The board sets remuneration strategy with a view to ensuring our market competitiveness and the competitiveness of our remuneration framework so that we can attract, retain, and motivate the talent Orica needs, and which delivers outcomes for executives that are aligned with shareholder returns. The three elements of remuneration at Orica are fixed pay, a bonus for the achievement of short-term objectives, and a long-term incentive plan. Full details of Orica's executive remuneration framework and a summary of the company's performance and the effect on remuneration outcomes of the results for the 2023 financial year can also be found in the remuneration report. By casting your vote in favor of the remuneration report, you'll be indicating your support for the remuneration strategy the board has adopted for its most senior executives, including the managing director.
I wish to highlight that none of your directors, nor any of the senior executives listed in the remuneration report, may vote on their own shares in relation to this resolution, and results of direct and proxy votes received in respect of the resolution are now displayed on the screen. We now come to the proposed grants of performance rights to the CEO under the long-term incentive plan as the long-term element of his remuneration for the 2024 financial year. The actual number of rights to be granted will be calculated as set out in the explanatory notes to the notice of meeting.
Under the ASX listing rules, shareholder approval is required for a director to be issued securities under an employee incentive scheme, and any votes cast in favor of this resolution by the CEO or an associate will be disregarded in accordance with the ASX listing rules. Results of the direct and proxy votes received in respect of the resolution are now displayed on the screen. Resolution 5 in the notice of meeting is to adopt Orica's Climate Action Report for the year ended 30th of September 2023, and the Climate Action Report forms a part of Orica's annual reporting suite and was lodged with the ASX and published on the Orica website on the 9th of November 2023.
This vote is also an advisory one only, and does not bind the company or the directors who remain responsible for the climate change strategy for the company. However, the board will take the outcome of the vote into consideration when reviewing the climate change approach of the company. Climate change is a material, strategic, and governance issue for Orica, and our climate change response is integrated into corporate strategy and continually embedded into the strategic, financial, and operational decision-making of the company. The company has made material progress towards delivering on its climate change strategy and targets. Future priorities and actions are also outlined in the company's Climate Action Report. In summary, those are the company has reduced net Scope 1 and 2 emissions by 9% from the prior year.
This represents a 22% reduction from 2019, our 2019 baseline levels, and we're on track to achieve the company's targets. A suite of strengthened climate change commitments and targets is presently in place, and execution of decarbonization pathways is well underway, and a further final investment decision has been made on the Yarwun Nitrates Decarbonization project. Tertiary abatement installation has commenced, and it's scheduled for completion in 2024. A roadmap for Scope 3 value chain decarbonization is established, and the company has set an ambition to reduce Scope 3 emissions by 25% by 2035. Customer and commodity portfolios continue to diversify, with 49% of revenue contributing in 2023, arising from copper, gold, and other future facing commodities combined.
Further progress is being incentivized with the introduction of the business sustainability metric into the company's long-term incentive plan for executives from 2024. Importantly, the company continues to advance new climate-related solutions to help our customers achieve their sustainability goals, such as ammonium nitrate and blasting products produced from renewable feedstocks. Full details of Orica's climate-related strategy, commitments, progress, future activities, performance targets, and ambitions are set out in our 2023 Climate Action Report. By casting your vote in favor of the Climate Action Report, you'll be indicating your support for the climate action strategy that the board has adopted for the company. The board unanimously recommends that shareholders vote in favor of this non-binding resolution. The results of direct and proxy votes received in respect of the resolution are now displayed on the screen.
As I mentioned earlier, I'll now take questions on all items of business, and we'll start by taking questions from each microphone here in the room in turn. If you wish to ask a second or further question, take your place at the end of the queue of your particular microphone so that all shareholders have an opportunity to be heard. I'll ask that shareholders be cordial, courteous, and respectful to those attending the meeting and to keep your questions to a reasonable length. Are there any questions from the floor? Microphone-
Chairman, your first question today is from Mr. Raymond of the Australian Shareholders Association.
Chair, the board, my question relates to changes in taxation. I know there's a push internationally to achieve a minimum 15% company tax, which is no doubt gonna require significant changes in an extensive number of countries. I know that Australia is considering their changes to implement this style of ruling. I also acknowledge that Orica is very much not the target for this, these style of changes. But I'd like to hear comment from you on how you see this as a potential risk of Orica becoming in inverted collateral damage because you are a very complex and very international company.
Yes. Thanks very much for giving us advanced notice of that question because it's relatively complex. The answer isn't. It's pretty straightforward for us. But the mechanism is... So I'll just read from some notes here for other shareholders. For the background of all shareholders, nearly 140 countries, led by the OECD and the G20 countries, have negotiated a two-part global tax agreement to address the tax challenges arising from economic globalization and digitalization.
They've established rules for the taxation of digital goods, and services in a 21st century economy, which is called Pillar One, and it sets a minimum corporate taxation rate, called Pillar Two, where multinational enterprises with consolidated revenue of over EUR 750 million are subject to a minimum tax level, being 15%, on income arising in each jurisdiction where they operate. Pillar Two becomes effective in 2024. Now, as you'd be aware, Orica operates in over 100 countries. Our revenue is close to AUD 8 billion, which equates to around EUR 5 billion. So we fit within the definition of the OECD multinational enterprise. The OECD has drafted what they call model rules that will provide a template for jurisdictions to translate into the domestic law.
Orica's this is the answer as far as Orica is concerned. We have undertaken preliminary analysis under these model rules, and that suggests that the tax impact to Orica will not be material. We'll continue to monitor these rules, obviously, and conduct further analysis as Australia introduces a domestic law. It's clear that there'll be additional administrative processes, but we're comfortable as a board that we have those processes covered. Next question.
Chairman, I have a Mr. Steve Sander.
Oh, sorry. Oh. Thank you, Chairman. I noticed in the... Is there any chance in the future that the company will be paying fully franked dividends?
It may be some time before we do that. We'll need to be... We've got a number of tax losses-
Sorry, I can't hear you.
in the past, but Sanjeev, would you care to answer that?
Yes. So the expectation is that in FY 2024, the dividend will stay unfranked as we offset the tax losses that we have accumulated here in Australia. Going forward, yes, there's a very high probability that we will start to issue franked dividends, but not for FY 2024.
Thank you, Sanjeev. And also, I noticed that we've got two corporate secretaries, and their names are mentioned in the annual report, but there were no pictures of them. Aren't they worth having their pictures in the annual report?
Well, obviously, they are. So, but-
Yeah.
If you'd both stand up. Well, stand up there, so we can see you.
Where was the second one? Thank you.
Thank you.
Some companies have the ages of directors in the annual report. Not that it really matters to me. I've been a shareholder for a long time, not for 150 years, but since the company was ICI. Another thing is, are all the directors residing in Australia?
Okay, so on the age issue, we don't publish that anymore. We used to, but I think, under new legislation, that, we can't do that.
That's right.
Not supposed to do that. It's regarded as ageism. And on the second part of the question?
Which was, where are the directors residing?
Oh, yes. So we, we have three directors really, who reside offshore or partly offshore. Mark Garrett, who was on the video, is in Switzerland, and that's where he is at the moment. Denise Gibson is in, comes from Chicago, United States. And, Gordon Naylor spends half his time in the UK, but, also in the other half in Melbourne. So there's, there is a mixture of... We try to, we, we try to keep, a number of offshore directors, if we can, on the board to reflect the fact that we are a multinational company. It's very easy, particularly during the COVID times, when it was hard to get new directors to come to Australia, in fact, they couldn't.
It's hard to attract international directors here, and we just need to be careful we don't become Australia or even Melbourne centric.
Thank you, Chairman, and thank you for running a good company.
...This man's job. We have one on microphone one?
Chairman, I'd like to introduce Mr. Anthony Rudd, who's got a question on Resolution 5.
Good morning, Chairman. I'm just wondering, why are we actually voting on item five at all? You've comprehensively reported on what the sustainability is and the climate change very, very well before. And why is it up to the shareholders to okay it? It should be just something that you would normally do anyway, as part of your tasks. Could you explain that to me, please?
Yeah, look, it's a very good point you make. You could extend that and be voting on whole lots of things which are really one might say, within management's responsibilities. But we have on this particular issue, there is a broad movement among shareholders, particularly our shareholders, to have this sort of vote. Now, it's not something we're going to bring forward every year. We'll bring it forward as we deem appropriate if there are major changes. But it is. It does give shareholders a direct way of commenting on it. But there are arguments on both sides of it. But best practice in corporate governance in the Australian environment does lead us to this way of presenting that information to you.
Thank you.
Chairman, I have Mr. Kieran Bala.
Good morning, Chairman. First of all, I'd like to congratulate the management for such a wonderful job in the results for the year. I've got one particular question on the recent legislative changes that have been proposed and passed. What's the estimated financial charge as a result of the Same Job, Same Pay legislation?
I'll ask Sanjeev to answer that question.
Thank you. Thank you for the question. Look, any legislation that increases our cost to operate in Australia, and Australia is an expensive destination to operate manufacturing, heavy manufacturing as we do, is impacting Orica. So the impacts of the new regulation is also going to be negative for Orica in terms of additional costs and additional burdens, in terms of regulation, in terms of reporting to us. Now, fortunately, we, being a globally diversified company, do not have all of our, you know, organization based here in Australia, so there will be a burden. It is something that we will comply with because it is now regulation, and we have no choice but to comply with it.
It's not something we are happy with, but it is something that we will bear, as we do with every other regulation. I always say that we are at the receiving end of all regulations that happen in this country, whether it was the Safeguard Mechanism, now we have the IR regulation coming in. We have to find smart ways of trying to continue to mitigate those costs but maintain these high-paying, very valuable jobs that we create and the value that we create for this country. It is not something we are very happy with, but given the fact that we are a globally diversified organization, we do not have all of our workforce based out of Australia, it is something that we will manage and mitigate in the years to come.
Thank you. Over on one again.
Yes, Chairman, a further question from Mr. Raymond on Gene's retirement.
Firstly, thank you, Gene, for your long service to the board and to Orica and the shareholders. I assume there's going to be a recruitment process for replacement, or is the board going to get reduced in number? Just confirming.
Well, we already have one extra director, Mr. Raymond, beyond what we would normally carry on the board. We don't want the board to become too large. So in anticipation of Gene's retirement, we've this year have appointed two new directors, so we're well covered. We just make sure the skill set is appropriate as well. So we've done that.
Thank you for confirming. Appreciate it.
Delphine, do you have any written questions?
Thank you, Chairman. There are a few questions that have come online, so we'll go through them progressively. The first question comes from Mr. Kevin Daly: With respect to your income statement, 60% of costs are for raw materials. While revenue was up 12%, raw materials were only up 8%. What are these raw materials, and is this a typical sensitivity of revenue to raw material costs?
That question correlates very nicely with the earlier question on IR and my comments on cost mitigation. So the biggest raw materials that we consume as a group, globally, but also here in Australia, is natural gas. So it's very important to note that we do not consume natural gas to generate electricity. We consume natural gas in this country to produce highly sophisticated and valuable products that go into the resource industry, the mining industry, the civil construction industry, as well as the agriculture industry. And these are products that are critical to continue to operate mining in this country, as well as to continue to operate in the food industry. So we are transforming our natural resources in Australia into extremely valuable products that are going into the Australian economy and generating, obviously, a lot of value and food security....
And that's very, very important that we continue to do that, and this means that we need to have cost-competitive gas. Gas as a transition fuel for the energy transition is absolutely critical, but that's very different for Orica because we do not consume gas for energy. We consume that gas as a feedstock, as a raw material. So our largest raw material exposure is to natural gas. After that, it is ammonia, which is what we also produce ourselves from natural gas. So that's a single-step manufacturing process to convert natural gas into ammonia. We do that in Kooragang Island, in New South Wales, and that ammonia then goes both the fertilizer industry to help the farmers in the country, but it also goes further down our manufacturing value chain to make ammonium nitrate, which is a key ingredient to manufacture explosives.
So once again, ammonia is a very critical, raw material. The third big raw material we consume is obviously electricity, because we are running continuous as well as discrete manufacturing units. Most of them operate 24/7, 365, and we are a heavy consumer of electricity. So these are the three main raw materials, and obviously, we have a very long chain of other feedstock. One, for example, is diesel. We consume a lot of diesel because we have a lot of our transport fleet, moving around from customer site to our manufacturing sites, as well as our transport, sector. But there's a lot of other raw material. Now, because of inflation, raw material costs have gone up significantly, and the team in Orica has worked very, very hard to mitigate the impact of inflation so that our margins, our profitability, doesn't get impacted.
The numbers that you've quoted in the question just prove that we have managed to mitigate this very fast increasing raw material cost, but we've also improved our margins. This is just by becoming more efficient, consuming less, if we can, consuming in a smart way, and not impacting the environment. I think that's a very good question, and it's a testimony to the management team and to the Orica organization that we have managed to control cost inflation within the global business.
Uh, Delphine?
The next question is from Mr. Daly. In the period FY 2021 to FY 2023, approximately AUD 54 million was spent on emissions mitigation. The annual report says that this AUD 54 million led to a positive shareholder return. In what areas was this return achieved?
In several areas. Now, decarbonization of heavy manufacturing industry or hard-to-abate industry in this country is obviously not easy to do. It's not just hard to abate, it's also expensive to abate, and this means that we have to invest first, and then we get the benefits of our investments over a long period of time. And that's why we made that investment of AUD 50+ million in decarbonizing our manufacturing plants, and this means we are not avoiding, but we are eliminating CO2 emissions into the atmosphere. First of all, that's the right thing to do. We are a heavy emitter in this country. We are one of the 216 heavy emitters which are part of the Safeguard Mechanism.
We started on the journey already in 2019, and since earlier this year, we now have a Safeguard Mechanism that says, if the heavy manufacturing industry in this country does not reduce their emissions by 4.9% per year over the foreseeable future, there will be penalties. So there is a cost involved of sending carbon dioxide unabated into the atmosphere. By making those investments since 2019, first of all, we are avoiding those costs, which are significant. Those costs could be hundreds and millions of AUD. So that's the first big benefit, that we are avoiding those penalties to the federal government, or we are avoiding to buy carbon credits to offset our emissions. The second is that we are generating carbon credits.
So under the Safeguard Mechanism, every ton of CO2 that we eliminate from the atmosphere, we get one carbon credit benefit for us. So we are accumulating those carbon credits, and those could be monetized, and they have a certain value. So over a period of time, we'll continue to accumulate them, put them into the bank, and they become a buffer for us in terms of either future regulation changes or, if we want to monetize that, we could even sell those carbon credits into the market and get our funding back in terms of those investments. So first of all, it's just the right thing to do in terms of investing in decarbonization. Secondly, we are avoiding penalties to the government, and we have been here an early starter, so we do not expect to pay any penalties under Safeguard Mechanism.
Thirdly, we are generating a revenue stream, out of, you know, collecting carbon credits. There's a threefold benefit to shareholders.
Thank you.
Thank you, Chairman. I'm going to summarize the next couple of questions from Mr. Daly, and it's in regard to cyanide. He'd like to know how many of our customers are cyanide customers in South Africa or South America, and he also wants to understand the sparge system and the transfer stations that are used in the movement of cyanide.
So just on the first part, and Sanjeev can talk to the second bit. About half of our cyanide customers are in Latin America and Africa, but none of those are in South Africa. But on sparge, sparging.
The product we are talking about is sodium cyanide. It's not cyanide, so that's, that's a very important difference. It's, it's a stabilized version of cyanide, which is safe. Cyanide can mean different things. We produce sodium cyanide, which comes out of our process in Yarwun, in a dedicated manufacturing facility there for several years now. We are one of the very few global chemical companies in the world who have technology and the license to produce sodium cyanide. It's a very specific technology, quite challenging to operate, and we are obviously experts in doing this. The product that we manufacture comes out in liquid form. We call it a liquor or a slurry or a solution, and that's the form in which the original product is manufactured at our factory.
So if we have the opportunity to put that into tanks or ISO containers or Isotainers and ship them directly to the gold mining customers, that's the most efficient way of handling the product. But obviously, there's restrictions to that because of the distance and the cost. So we are using what we call sparges or sparge stations, and we have several of them all over the world. We have one in Africa, we have one in Latin America. We've just started one in Malaysia, where we are shipping the product into these sparges, you know, using sparges into these sparge collection stations, and then from there, we are breaking bulk, breaking them into smaller parcels and sending them to mine sites.
So it is just the most efficient way of handling sodium cyanide in a liquid form. Now, obviously, you can't do this everywhere because you need to have more handling and costs involved, and that is why we also have solid form of cyanide or sodium cyanide. Now, that obviously needs more processing and higher costs. So that is why the most efficient way of handling sodium cyanide is in sparges, in liquid form as it is produced, and then it is taken to our customers. And we are the global leaders in terms of using this technology. It's also safer because there's less risk of leakages and contamination, and it is also the most efficient, cost-efficient way of handling the product, and that's what we have been doing very successfully.
Thank you, Mr. Chairman. The next question is also from Kevin Daly, and he'd like to understand the reasons why we stopped trading in Venezuela and in Turkey.
Well, Venezuela clearly is a country that's gone through enormous challenges. And our business, our customers there, in fact, stopped operating, and we just found it... It was a very profitable market for us many years ago. But since the political upheaval sort of occurred in that country, we have found a mechanism now to withdraw. Turkey is a little bit different. That's related to the structure of our business in Turkey and the joint venture that we've had, which again, over time has changed and has become more difficult for us, and just doesn't fit with our current strategy. So we've exited that joint venture. At this time, it doesn't mean that we can't engage in Turkey if the situations change.
Thank you, Chairman. The next question is: about what extent are your Australian production facilities covered by the security guarantee regulations?
I'm not clear on what the security guarantee regulations are, so that's a question we'll take offline, and then our Head of Corporate Affairs, Paul Evans, will then look into this and come back to you with an answer. I'm not familiar with this regulation, so apologies for that.
Thank you, Mr. Daly, for your well-researched questions. The next question comes from Mr. Stephen Mayne. It's a long question, but I'll just bear with me, and I'll read it out. "In 2019, Treasury Wine Estates voluntarily moved to annual elections for directors in line with best practice in the U.S. and U.K. Dual-listed companies like News Corp and Rio do this due to the U.S. and U.K. laws, and BHP are continuing, even though their U.K. DLC ended in 2021. Can John Beevers, as one of our long-serving directors, along with the chair, comment on whether they will examine the prospect of Orica following this TWE lead and moving to annual direct, annual director elections at the next AGM? And hopefully, it should be in January 2025.
Thank you, Mr. Main. Look, our process for election of directors follows the Australian market practice and legal requirements. I have sat on other boards where they might be listed, for example, in the UK, and the practice there is for annual elections. I don't personally have a problem with that, but as a company, we follow the practice and the legal requirements of the country in which we are domiciled, which is here in Australia. I don't-
I don't think I've got anything to add to that, actually.
Yeah. Thank you.
Thank you, Mr. Chairman. The next question is in regard to the LTI grants. Could the CEO summarize his past LTI grants as to whether they have vested or lapsed? And have you sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build up the equity position in the company?
No and no and no. No LTIs accrued, no shares sold, and none acquired. There's a simple, very simple table, 4 columns on page 99 that gives you all the details, Mr. Main.
Thank you. We do have another question on the floor before we continue with ones from Delphine.
Mr. Chairman, I have another question from Mr. Bala.
Thank you. Mr. Gandhi mentioned that we're having discussions with the government with respect to the Carbon Border Adjustment Mechanism. I presume that mechanism will only relate to our operations within Australia. Now, considering that there are a number of other entities that are not subject to an equivalent scheme overseas, and we operate in over a hundred countries, what's the strategic plan for the company to mitigate this effect in other jurisdictions?
... Thank you, Bala. Thank you for the question. So it's a bit complex, and I'll try and explain that as simply as I can. The whole idea of a CBAM or Carbon Border Adjustment Mechanism is to ensure that domestic industry onshore in Australia, heavy manufacturing industry, who's under the jurisdiction of safeguard mechanism, and which means that all of us have to reduce our emissions by 4.9% every year in a hard-to-abate industry. We are doing that, but there is an option either for the manufacturer, like Orica, or a customer of Orica's, to import the product from elsewhere in the world.
And if the product comes from a jurisdiction who does not have an equivalent, safeguard mechanism, regulation on reducing their emissions, there is an unfair advantage to them, or there is an unfair disadvantage to manufacturers in this country. And if those products, as an extreme example, if there's Russian product who do not have a, a decarbonization regime, come into Australia and compete with Australian product, who has the higher costs and the regulations to operate here, that's unfair disadvantage. So what the EU did, the European Union did, is they came up with a Carbon Border Adjustment Mechanism, which is a world-first standard, to ensure that, there's a level playing field. The European heavy industry is then protected from these kind of import activities, and there's no unfair advantage or disadvantage on both sides of the, of, of the border.
So I'm asking that Australia consider this very seriously, and I'm really pleased to say that the industry ministry has taken this up, based on, you know, feedback from us and other manufacturers, for example, cement and steel manufacturers who face the same challenges in Australia, to ensure that we have this level playing field. Now, we do operate in jurisdictions beyond Australia. In Canada, we are also part of a decarbonization effort, so we are already subject to those Canadian regulations, and we have already decarbonized our Canadian operations. So we have made those investments to reduce our CO2 footprint. We are also generating carbon credits for this, which is paying for those investments. We also operate in Indonesia. Indonesia is not yet there in terms of implementing a carbon regime, but it's event...
You know, it's gonna come. As the mining industry continues to develop and Indonesia becomes a very important hub for future-facing commodities, for battery minerals, for example, they will hence also have to come with this kind of mechanism. So the Carbon Border Adjustment Mechanism protects industry until there's a global standard, so that there's no unfair advantage or disadvantage either for Australian manufacturers or for manufacturers elsewhere in the world. So it's a transition mechanism that basically ensures a level playing field so that, you know, we do not get punished for doing the right thing in this country. And that's my ask of the government to say: Please do include the Orica business, which is manufacturing of ammonia and ammonium nitrate, into your scope of investigation so that our industry and our downstream industries in this country are protected adequately.
Thank you. Any further questions on the phone from Delphine?
There are five more questions, Mr. Chairman.
Mm-hmm.
So the next question comes from Mr. Stphen Mayne: Under the Orica Constitution, external nominations for the board must be lodged between 45 and 90 business days before the AGM. With a rush pre-Christmas AGM today, the latest nomination date this year was 11th October. However, Orica didn't release its full-year results until the 9th of November, and the notice of meeting was released on the 13th of November. The question is: Will the chairman agree to return to a late January AGM in the future so that the board nominations close after you've told shareholders about your performance for the year? Why the rush?
So, on the central question as to the timing of the AGM, we used to have the AGM at the end of January, sometimes even into early February. We just found that was impractical, and from a shareholder's perspective, you were dealing with a financial year which had finished in September 30, and people had been on holidays, and it was just not appropriate. I think it's good to have the AGM as close to as possible to the annual results. So we have... And certainly, with our new upgraded IT systems, we're able to meet a pre-Christmas AGM, and I would certainly urge the board to be continuing with that process.
I think it's more relevant to shareholders, and it means that there's a lot of work going into preparation for an AGM, and then people can have their Christmas break unburdened by that impediment. As far as election of directors is concerned, we stick with what is the normal practice. So, I don't think other companies have an overlap, but I could be corrected on that. The next question?
Thank you. Thank you, Mr. Chairman. The next question is from Stphen Mayne. Could the two new directors up for election today, Mark and Vanessa, along with the chair, comment on the recruitment process that led to their appointments to the board? Was a headhunter involved, and did the full board interview any other candidates? Did Mark or Vanessa know any of our directors before engaging with the recruitment process?
So just for process, Steven, all questions come through me, and I'll answer them. As far as the appointment of the two directors, new directors are concerned, yes, we did use a headhunter. And yes, we did talk to other candidates. And the board had a criteria for each new director to make sure our skill sets were appropriate with the strategy of the company. So, we went through a proper due diligence process, and I think the outcome of the two excellent directors we've appointed speaks for itself. I think that's the-
Yes.
Yep, that was the full, the full question. Thank you.
Thank you, Mr. Chairman. The next question is also from Steven Male, Stphen Mayne, I beg your pardon. Is Malcolm committed to serving a full 3-year term as Orica chair through to December 2026, when he will be 74? Also, does he believe the next Orica chair is currently on the board? And what is the process in terms of the other directors doing Malcolm's annual performance review? And could Malcolm detail the extent of his relationship with two of the largest and most active shareholders, AustralianSuper and Cooper Investors?
Okay, look, we have a guideline on the board of serving at about 10 years. And, subject to conditions, that would be appropriate for me as well. So this would certainly be the last time I'm up for election in front of our shareholders, unless something very extraordinary happens, and at the age of 74, gosh. And, so, in terms of the... I've lost the question.
Um, comment.
Yeah. Yes, so the chair is appointed by the board, so I serve as chair, you know, depending on the satisfaction or otherwise of my fellow directors. As far as the appointment of a new chair is concerned, yeah, I think everyone on the board could be a chair of this company, but it's a matter of whether their situation and other commitments allows that. And we have a process to ensure that we have adequate, fully qualified and suitable people who are available to be my successor. That is again a question for the board as a whole, and I think it's inappropriate for an outgoing chair to impose too much of their own views on that process.
It's up to the continuing directors to be involved. Obviously, I would vote, but we have a independent process around all of that when the time comes. I think that covers the question, Delphine?
Yes, it does. The next question is on the Climate Action report, and it comes from Mr. Kevin Daly. About 20% of your revenue comes from the coal mine, mining industry. If this closes early, as demanded by Chris Bowen at COP 26, will your action plan be badly affected?
Yeah, the energy transition away from coal and eventually natural gas into renewables is going to take long. It's going to be disruptive, and it's not a process that's going to happen overnight. Orica has been preparing for this transition, and our expectation is that we will not stop to serve the coal industry, because I think we do more benefits in terms of the way the coal industry operates. And as long as there is demand for Australian coal in emerging markets who do not have the adequate energy mix to maintain their economies, there will be a coal mining happening in the country, and we will continue to support our customers. Having said that, if you look back at our history and the strategy, our share of coal, say, 10 years back, was more than 40%, and specifically thermal coal.
This year, as we've reported, is down to under 14%. So there has been a significant transition in terms of the portfolio mix, and that's not happened because we have stepped away from coal, but because we have grown all other commodities, for example, iron ore, copper, gold. So we'll continue with that strategy, and I do not expect there's going to be any sudden shut of coal consumption. Maybe consumption in country, in Australia, will reduce, but the demand for Australian coal, which is one of the most high valued and precious commodities for the rest of the world, that will continue. So exports of Australian coal will continue, and we will continue to cater to that need and demand.
But progressively, the strategy, as we execute this, the share of that coal business will continue to shrink and will eventually, over the next 5, 10 years, go below 10%, and then it starts to become insignificant in the bigger picture. So we intend to enable that transition of the coal industry. We'll continue to support our customers, and then we'll also continue to grow every other commodity, including future-facing commodities, which is the future of Orica.
Thank you, Mr. Chairman. The final question from the line comes from Stphen Mayne. His question is: "When disclosing the outcome of voting on all resolutions, could you please advise the ASX how many of our 35,000 shareholders vote for and against each item, similar to what happens with a scheme of arrangements?" He quoted a couple of companies who've moved down that path over the last three years.
Just while we're getting our head around that one, there was a little bit more that on Steven's previous question around involvement with Cooper Investors and Australian Shareholders Association. I do meet with those and with all the other major shareholders each year on corporate governance issues to see whether they've got any views on matters that are coming up for the AGM or or on the company generally, and their independent view. Gives them an independent view on or line, if you like, to the board on their view of management. Obviously, they're both very important shareholders, but we do meet with all of the major shareholders in the company. Do we have a Can you just repeat that question
I will.
The last question.
He'd like to know whether we'd advise the ASX on how many of our 35-
Oh.
1,000 shareholders voted for and against each of the resolutions, similar to what happens with a scheme of arrangements.
Ah, so you want numbers rather than percentages? Yeah. Look, we, we don't see that there's a lot of benefit in doing that. And the key principle of one share, one vote is quite fair, and that's reflected in the percentages which are shown. So, we, we don't intend to go down that road at this point in time.
Thank you, Mr. Chairman. There are no further questions from the line.
Any other questions on the floor? No. Okay, shareholders, as there are no more questions, all that remains is to complete the poll by submitting your votes, if you've not already done so, and that then concludes today's business. And I will now formally close the meeting. And once you've completed your voting card, please place it in one of the ballot boxes at the exit or hand it to a member of the returning officer's staff before leaving the room. Online voting, rather, will remain open for another 5 minutes, and following the close of voting, the results of the poll will be announced to the ASX as soon as they're finalized. It's clear from the direct and proxy votes received that all the motions will be carried.
Thank you for your attendance today, and on behalf of my fellow directors, I thank you, our shareholders, for your continued support. Light refreshments for those who have attended in person will be served in the ballroom foyer, where you will have the opportunity to meet the directors and members of Orica's executive committee. Thank you very much.