Every day, all around the world, the people of Orica help mobilize vital resources essential to progress and prosperity. Resources that make energy, transport and infrastructure, modern electronics and new technologies that billions of people rely on. Our story began back in 1874 when we supplied explosives to gold fields in Australia. Since then, we've grown to become the world's leader in mining and civil blasting. Providing world-class products and services to extract minerals safely, efficiently and responsibly. We're a truly global company. Our community of engineers, scientists, technologists, business specialists, operators, and onsite crew support customers in more than 100 countries. Backed by our global supply chain and manufacturing footprint, we're there for our customers when they need us, no matter where they are. We're not standing still. We're looking to the future and reimagining the way we work.
Already, robotics, automation and data are transforming our industry. Innovation is allowing us to think differently and operate even more precisely. From digital technologies that help connect, monitor and track, to progressing blast automation. Improvements can be realized across the mining value chain, making blasts more predictable, more productive, and much safer. Because making sure we all return home safely each day to our loved ones is our number one priority. To help solve the challenges we all face and to seize the opportunities these technologies will bring, we work closely with our customers and peers while investing in our own research, alliances, and partnerships. By harnessing next-generation technologies, we can create meaningful impact, not only for our customers, but for the communities where we work to help address environmental and social challenges. A responsibility we proudly embrace.
Underneath it all, it's the thoughtfulness and curiosity of our people, every one of them, who make the difference. We work as one team, always guided by the values we share and uphold. Together, we can continue to pave the way forward and ignite opportunities that create a better future for us all.
Good morning, ladies and gentlemen. Welcome to Orica's 2022 Investor Day. It has been some time since we had the last one, so I'm so pleased to have you all in the room here today and those on the webcast. Before we start, let's just go through some legal issues. I'd like you all to study the disclaimer and then repeat it. Please take a minute to read it and we'll start from there. Thank you. For those who I haven't met, I'm Delphine Cassidy, Chief Communications Officer. I've been with Orica seven years, and I'm pleased to be here today. I'd like to start with the acknowledgement of the Gadigal of the Eora Nation, the traditional custodians of this land, and pay my respects to the elders past, present, and emerging.
We do appreciate that you've taken the time to join us today, and for those who've joined on us on the webcast, welcome. Before we start, as part of our safety procedures, I'd like to take you through the emergency procedure. If we have to evacuate, you will hear the tone. All of you are quite familiar with that. On hearing this tone, please move to the exits at the back. The Fullerton staff will then guide us to our meeting place, which is at The Fountain on Martin Place. Orica Investor Day is your day. In planning for this day, we've asked a few of you as to what you'd like to hear from us today. It came down to three things. The first thing was to meet and greet our executive team. We've got some in the room today and some virtually.
That's the world that we live in today. We've done our best to get everyone in the room. The second one was to go through our verticals, which is the platform of our refresh strategy, and get to understand that more. The final one was that how do we measure success and what are the growth opportunities for Orica going forward? Hopefully, by the end of today's briefing, we give you an insight in all those objectives, and you walk away knowing something more about Orica. We structured today's program around our four verticals. It's the core mining vertical, quarry and construction, digital solutions, and mining chemicals. We'll also touch on manufacturing and supply, sustainability, and our financial priorities.
In the room today, we've got our Australian-based executive team, except for Germán Morales, who is now in isolation, but he'll join us on Zoom. We've got here Christopher Davis, Sanjeev Gandhi, Angus Melbourne, and Leah Barlow in the room, and we'll have all the others on Zoom. We'll have plenty of time for Q&As after each section, and the management team in the room and online will be there to answer your questions. We'll take questions from the floor. There's some microphones around the place, so please take a moment for the microphone to come to you and ask the question so those on the line can hear you. For those online, we've set up a Slido facility. There's a QR code that you can scan, and you can ask your question through the QR code.
For those in the room too, we've put the QR code on your table so you can use that facility as well as the microphone facility. In light of time, we'll start with the questions that are most uprated in the facility. You can uprate a question. If there's something similar that you'd like to ask, someone's already asked that, please just uprate that, and we'll start with the highest and move down. I do encourage those here in Melbourne to have a cup of tea with our management team during the break, and then have some lunch with us after that. For those attending our Kurri Kurri site visit tomorrow, can you please just get in touch with Joyleen at the back desk, and she'll give you the instructions for tomorrow. With that, I'll hand over to you, Sanjeev, to start the day. Thank you.
Thank you, Delphine. A very warm welcome to all of you. It's great to see a lot of familiar faces here. I was hoping we'd get more in, but logistics is not easy. Even getting from Melbourne to Sydney can be a challenge, and obviously COVID is still with us. We've had a few last-minute dropouts, but this means we have more people online virtually, which is great. We have the technology and the tools to manage this. As Delphine said, this is long overdue. We, in fact, planned a similar event last year, but obviously because of known reasons, we could not go out and do it. I'm glad we managed to find a virtual and smart way of doing it today.
Today it's all about all of you getting to know the management team of Orica. I mean, you see Chris, Delphine, and myself all the time, so we are the same boring old faces. You'll see the rest of the team today, and I think that's great. They're all very excited. They've been preparing quite hard for this. Some of them, since you know that we had a new refreshed management team as of April last year, they're doing this for the first time. Do bear with us in case we are not smart enough to answer every question you put up, but we'll do our best. I promise you that. That's the opportunity today.
We'll also talk a little bit about our thought process behind that strategy which we rolled out in November, and maybe give you a bit more granularity. We'll not be able to tell you everything so far because we are still constrained by, as I've been telling a lot of you, our systems in terms of numbers and everything else. We are getting there, but we are not yet ready today. This will obviously lead eventually to giving you a lot more granularity by business vertical, as Delphine talked about it. Tomorrow is again going to be very exciting for all of you who can go visit our technical center at Kurri Kurri. There, it's all about touch and feel. I was telling Angus, our CTO, I said, "No slides, no posters, no PowerPoints.
If you cannot demonstrate, don't talk about it." I'm hoping that he'll get you excited. I would have loved to be there, but we have limited room there because of safety reasons and everything else. I decided to opt out so that more of you can participate. I leave you in the very capable hands of Angus. We'll get you to leave your phones outside because obviously what we'll show you is for your eyes only. You can obviously talk about it, but no pictures please, yeah, and I think you understand that. Let me start by focusing very briefly on the first slide. Delphine talked about our values. The values did not change. These are the values we have in place since 2015. I still very strongly believe in them.
We did refresh our strategy and focus, but we kept those values very much alive, because they are so relevant today. Safety is an extremely important subject for us. We are in a dangerous business, right? We do everything we can every day to keep our team safe, our operations safe, our customers safe. It's again a reminder to all of us that we are in a dangerous business and complacency can be very tricky here. It's front and center of everything we do. I keep encouraging the 13,000+ Orica family that if you see something happening which you feel uncomfortable with, which is not safe, you put tools down, you stop operating, and you raise your hands. I and the management team are fully behind this.
We do not encourage any kinds of unsafe operations, and we'll do everything we can to keep our communities around us and everybody else safe. That's extremely important. Quick update on Russia. A safe exit out of Russia is very important for us as we told you at the half, that we are in the process of exiting the business in a smooth and undisruptive, safe manner. I feel comfortable that by September when we come up with our November results, we'll be able to give you a lot more clarity on that. It's still work in progress and as you can imagine, we have to deal with regulators here or in Russia it's difficult. You cannot go into the country, so it's not straightforward.
we have a clear path and we'll keep you updated here. Moving on, just a quick reminder of our strategy, something we shared with you in November. Our purpose, to sustainably mobilize the Earth's resources. It becomes even more relevant today in an environment where we are living in a very, very disruptive world. We have COVID. We still have a lot of geopolitics happening. We have energy disruption happening all over the world. We have inflation coming in. there's every kind of challenge here that all organizations and all businesses globally face. it's very important for us that we double down on the strategy. We don't get distracted. We focus on what's within our control and influence, and it's all about delivery.
That's what the team focuses on every day, and we do everything we can to not let our customers down. I'm pretty pleased to say that we've been making good progress, and there'll be obviously more over the period of time, days, weeks, months, and years where we'll continue to update you on the strategy. We'll talk a little bit about how we will win today. Each of the regional business heads, the presidents, will talk about ideas like optimized operations. We talk about partnerships for success. Then we talk about obviously on the right of that slide on the four verticals. We'll give you a bit more insight on our thinking on quarry and construction, mining chemicals, technology. Tomorrow it's all about technology, but Angus will already set it up today. Then obviously our core Mining and Blasting Services.
Moving on. This is just the view that the industry has on global material move. We obviously monitor a lot of different sources, and we try to put together a cohesive heat map of major commodities that our customers are active in and which have an obvious direct impact on our business. That's a summary of various different sources. This is all published information. We put in an Orica view on this. This was basically the starting point for the strategy when we said, "Where is the opportunity," right? What are we going to focus on over the next five, 10, 15, 20 years? What's the future of this industry? This gives you a pretty good view.
I mean, gold being countercyclical as a safe haven, and we being a leading service provider to that industry. Obviously, we benefit from the fact that it gets more and more difficult to extract gold ore. This means there's more demand for our products and services and especially for mining chemicals. It's a very successful business for Orica, and we continue to invest in gold. Copper, we are the largest service provider to the top ten copper mines in the world. It's a very, very important part of our portfolio. It's growing very successfully. Even though there has been some slackening of those peak copper prices, copper is a fundamental enabler of the energy transition of the world, and we are very well-placed here to take advantage of this and support our customers.
My view on thermal coal has not changed. That we will see over this period of time until 2026 peak thermal coal production. Obviously, the energy disruption, the energy market volatility has pushed that out. Coal will have a longer run, but eventually coal production will stabilize and then start to shrink. The base case business plans that we had in our strategy assumed peak production by 2026. This might get pushed out. It all depends on what happens with the energy markets and the pace of transition. Coal is one of those few where we've already recognized that there's going to be a plateauing, and then there's going to be an eventual decline. Obviously, Q&C, that's another business, quarry and construction tunneling, which I always visualize as countercyclical.
Because if global economies start to reduce activity, then governments start to spend on infra, which has a direct impact on Q&C and tunneling. That's a very good business to have. It grows quite strongly as you see there. We'd like to do more there because there's clear opportunity. Obviously, met coal and iron ore. It's once again very closely linked to global GDP. Despite whatever China does in terms of managing their own demand, I think there's good potential for that business and we'll continue to grow there. In the end, it's the future facing commodities like I talked about copper, but then it's the rest. It's lithium, nickel, copper, cobalt, manganese, going into e-mobility, going into battery storage. A lot of those products are also going into energy transmission.
Very exciting, we are looking into opportunities everywhere because this is a business that will grow very strongly in our portfolio going forward. It's a pretty good picture. It's a positive picture in terms of the macros for our customers and their commodity exposure. As you can imagine, being the global leader here, we will directly benefit out of those positive macros going forward. Moving on. That's just a snapshot of our current business portfolio. That's the same as for March last year. You see that our top exposure is to copper, gold, Q&C, thermal coal, and it's a pretty good spread. Also, regionally, we are very well positioned and also in terms of our product offerings with our emulsions being the largest contributor to our top line.
We have a pretty quite a strong diversified portfolio of products and services for our customers. Moving on. Global reach. I cannot stress how critical and how important this has been to the success of Orica managing all these disruptions over the last 18 months. Given the fact we have this fantastic footprint of manufacturing sites, assets, offices, people on the ground in more than 100 countries. We've been able to mobilize at very short notice products and services from one part of the world to the other. We've managed to move our raw material sourcing away from Russia without disrupting our customers. That's all been possible because of this fantastic global network that we've had. We continue to leverage this. We continue to optimize inter-regional flows. We are, and Leah will talk about it.
We are developing a hub and spoke model for the regions to make them self-sufficient so that we take cost out of the supply chain because inflation is obviously a constant headwind in everybody's business today. There's a lot more we can do in terms of generating value out of this fantastic global footprint. This is a true competitive advantage of Orica, and we'll continue to build on this. You'll hear examples of us expanding a footprint in emerging markets like in Africa, in Asia, where there's clear opportunities. We'll continue to leverage of this fantastic asset that Orica has built over the last 148 years. Finally, clearly on the left, our focus. I talked about safety, extremely important for us. The strategy is in place. The focus is right now on execution.
Everything we do every day is all about executing the strategy. Continue to invest in technology, very, very important for us. Ensure that we do everything we can to deliver profitable growth for Orica and for our shareholders. Then obviously, hopefully, with the strategy working well, we having some tailwind, the macro's in our favor, we will be able to deliver shareholder value. I feel pretty comfortable where we are today, and the guidance we gave you for the full year, full financial year has not changed, so we are well on track. Obviously, in November, we'll come back with the financials, and let's then talk about 2023. With that, thank you all, and Delphine, back to you.
Thank you, Sanjeev. Now, as we turn to our four verticals, I'd like to share a video with you showcasing our approach to innovation and technology. In the mining vertical, we're combining our market-leading blasting technologies with advanced digital and automation solutions to revolutionize operations of the future. A key technology that's enabling this change is WebGen, the world's first truly wireless through-the-earth initiation technology. With the support of our customers and the tireless efforts of our technical specialists around the world, we've successfully now fired our 100,000 WebGen primer across more than 3,000 blasts.
As adoption continues to increase rapidly, we're now using WebGen across six continents in six unique industries. More importantly, having developed seven revolutionary mining methods, we're enabling our customers to think and mine differently. We believe this technology is a real game changer for the mining industry. I'll let you have a look at a video. Thank you. Good morning, Germán. We are ready to go.
Thank you, Delphine, and good morning to all in the room in Sydney and those joining us on the webcast. For those who didn't meet me at the last Investor Day, I joined Orica about four years ago leading the Latin America region, and then moved to Melbourne about a year ago to lead the APA region. Prior to that, I spent 18 years in this industry having worked in Europe, Africa, Americas, and Australia. Given the growth opportunities in Asia, we have split the region into Australia Pacific and Asia. I'm going to start today's presentation talking about the complete APA region. I will then go into some details on Australia Pacific, and Adam Hall will talk to you about Asia. Turning to slide 15, where I will give you an overview of the APA region.
Australia, Pacific, and Asia continue to be attractive markets for Orica, contributing 39% of sales and 67% of total EBIT. We are proud to be operating in a range of countries across APA and to positively contribute to those communities in which we work. Orica serves a diverse group of customers across all major commodity segments in the region. Most noticeable is our position in coal in both Indonesia and Eastern Australia. Gold representing about 16% of our sales and a growing position in copper at 14%, up from 12.5% last year. We also continue to make good progress in diversifying the business across metal, quarry construction, and digital in recent years as we continue to service the thermal coal transition.
We deliver value to our customers through a holistic value proposition, expanding a complete portfolio of products, services, and technologies, including mining chemicals. Elevated commodity prices, strong mining activity in the region, and tight global supply chain of ammonia, among others, has driven high demand for our products. This increased demand, coupled with commercial discipline, enable improved pricing across all categories and subregions. However, the region is not safe from the many challenges the world is facing. Other than the well-known impacts of labor shortages, COVID, inflation or supply chain. I should highlight that adverse weather in Queensland and New South Wales resulted in a temporary halt of customer operations in the first half of this financial year. Let's look now into Australia Pacific region in a bit more detail on slide 16.
The Australia Pacific region is forecast to continue growing over the next five years, with material move volumes expanding at 1.4% per annum. Ongoing growth is expected in all commodity segments except thermal coal. Future-facing commodities, including copper, are forecast to demonstrate the fastest growth in the medium term. This includes copper in Papua New Guinea and Australia, nickel in Australia and New Caledonia, and lithium in Australia. Thermal coal is the only commodity where we don't see any growth in the mid- to long-term. Despite record high prices, Australia has not been able to grow thermal coal exports above the pre-COVID peak. While some improvement in exports can be expected in the coming years, it is likely to be offset in the midterm by declining domestic coal consumption as energy transition in Australia accelerates.
In terms of the overall volume of material move, steelmaking commodities are forecast to drive continued growth as global seaborne metallurgical coal and iron ore market expands. While in iron ore, this is driven by committed projects, additional capital expenditure will be required to support metallurgical coal growth opportunities. We are operating in a volatile market with significant change impact in our customers. We have seen unprecedented iron ore and coal prices in recent months. Global energy security concerns and other geopolitical factors are impacting commodity demand. As previously mentioned, renewable and clean energy markets are expected to drive significant growth in future-facing commodities such as lithium, nickel, and copper. Finally, COVID, the tight labor market, and supply chain constraints continue to challenge our customers. These changes are influencing customer needs and expectations from key suppliers such as Orica.
Security and flexibility in supply is even more critical than ever due to the price volatility and events such as La Niña. Technology and automation solutions are needed to drive productivity and safety improvements, and customers are demanding that suppliers step up ambitious ESG commitments. The solution is not one size fits all. We are and will continue to unlock value for our customers through tailored solutions for each segment and indeed each customer. Over the next two slides, I will expand the first two elements, security of supply and technology, starting with security of supply on slide 17. Orica offers unmatched security of supply across Australia Pacific region. We have three ammonium nitrate manufacturing facilities. They're strategically located to service metal and coal customers in the east, as well as iron ore customers in the Pilbara.
Additionally, we have a long-term third-party contract to supply ammonium nitrate to our Southwest metal customers. Yarwun completed the conversion of acrylonitrile in the first half of this year. This universal prill is enabling us to better service our clients as well as other Orica regions where melting AN is required. This outstanding ammonium nitrate footprint is complemented by a network of bulk emulsion plants in the east and west, domestic initiation systems and electronic detonators assembly in Helidon, packaged emulsion manufacture at Kalgoorlie, and booster manufacture in an exclusive domestic partnership. Finally, the safe, efficient, and effective deployment of our products and solutions is supported by a strong and committed group of professionals across the region, including a wide technical service presence and our technical center at Kurri Kurri that some of you will be visiting tomorrow.
This privileged industrial footprint, plus dozens of sites and depots across Australia Pacific, set us apart from many other industry players. Moving now into technology on slide 18. Beyond security of supply, Orica is delivering value through our ESG and technology proposition. High commodity prices, labor shortages, productivity or safety are some of the elements that underpin technology adoption. Customers are responding to Orica's digital offering with a strong momentum in OREPro 3D, Design for Outcome or fragmentation systems. Our digital offering is helping customers to optimize blasting and capture downstream benefits. We are very well placed for growth in 4D and WebGen. As reported, we have had three successful 4D trials in customer sites, and we have just signed for one.
We also have a mature pipeline for underground WebGen application with five new sites in fiscal 2022, and we are looking forward to the release of WebGen 200 as we see significant value for our open cut customers. Orica's Advanced Vibration Management, fume, and noise control reduction solutions are supporting our customers' license to operate in their respective communities. Finally, and in addition to helping customers to deliver on their ESG commitments, we are delivering on our own initiatives such as nitrous oxide abatement program. Moving now to slide 19, which summarizes the AusPAC priorities. In our region, to be successful, we need particular focus on three areas. Firstly, we need to lead in sustainable solutions, and as such, we target to continue diversifying our business by growing metals, quarry and construction and digital portfolio. We also commit to deliver on our net zero commitments.
I'm particularly proud to report that we have made significant progress on our net zero vision, including preparation for test facility in our Kooragang Island, developing a pre-feasibility for Yarwun, and secure approval to generate carbon credits. We have also established a collaboration path for green hydrogen and ammonia at both Kooragang Island and Yarwun. Secondly, we need to optimize our operations to further improve on security and flexibility of supply. Furthermore, we need to ensure we grow profitably and focus on commercial discipline, cash generation, and technology adoption. Finally, we need to empower our people. We need to engage, attract, and retain talent through core products that deliver on a compelling employee value proposition in what is today a very dynamic and competitive market. I will now hand over to Adam to give you an overview on Asia. Thank you.
Thanks very much, Germán. My name's Adam Hall. I'm the group executive and president for Asia and Chemicals. I've been with Orica three years, initially in the chief development officer role, but now taking on Asia here in Jakarta and also our chemical business, and you'll hear from me later on that. But for now, what is Orica Asia? We think of Orica Asia as four distinct subregions. Indonesia, rest of Asia, India, and China, and that's in descending order of contribution to our earnings. Each of these has generally strong competitive intensity. They're complex regions, but they're exciting. Turning to Indonesia to start. In Indonesia, big exposure to gold and copper as well as thermal coal.
The trend we see there at the moment is for localization. Our competitors are building domestic manufacturing capacity, including a large AN facility coming on in about 24 months. Miners are seeking on top of that to really enhance their productivity. The level of engagement from Indonesian miners on comparatively advanced solutions is high. They're receptive, they're engaging, they're pushing us to bring them the highest quality solutions, which is terrific. What's our position? We're seen as a technical leader, so our clients frequently rely on us for that reliability of supply and for those differentiated outcomes.
Across the course of the next few years, we'll be absolutely focused on driving better solutions for the Indonesian miners, often with higher use of technology, including WebGen and 4D. Turning to the rest of Asia, you can think of rest of Asia as sort of led by Philippines, Malaysia, Mongolia. Then we're also present in Hong Kong and then the rest of Asia also are served indirectly. Here, again, a dynamic region. Lots of complex regulations. You may remember, for example, the Filipino gun ban, which prevents explosives moving around the country during elections. That, of course, makes our role there harder. Proud to say that we're seen as the leader there, for that region.
The premier partner to clients as they drive productivity out of their mines. Something that's interesting on the horizon, with the recent change of regime in the Philippines, there's a number of mega projects in the Philippines in gold and copper that will come to the four probably in the 2025, 2026 sort of timeframe. Orica just in a great place to be able to drive the to partner with them and drive those projects. This region, gold and copper and Q&C. A lot of Q&C exposure here, and that's where, again, working with our partners, we have a strong presence. We're seen very much as being the leader in Q&C across East Asia, and it's something we're pretty excited by. Turning to India.
In India, key commodities, obviously coal with Coal India, but also iron ore and other metals, and then Q&C. One of the interesting trends in this market, it's quite intriguing. Simultaneously, there's some people that use non-electric detonators. The very initial basic detonators, but also clients are demanding digitization. I think Orica's really well positioned with our broad product suite to both move clients along the journey from comparatively less sophisticated to more upscale detonators and detonator systems, as well as immediately starting to serve them on the digital track. So you can see our position there is as a premium provider. We are used for and partner for technically demanding challenges. One thing you may not appreciate is that often those technically demanding challenges are Q&C based.
In a highly urban environment like India, being able to blast nearby a population or respecting existing facilities that are already there, that's something that people come to Orica for, which is terrific. We'll be looking to increase share in India in a growing market, and again, based on driving customer productivity. Just to give you a sense of scale, several of our large customers not looking to grow by 10%, not looking to grow by 50%. They're looking to triple or quadruple output across the course of the next five years. Partnering with them on that is an exciting opportunity. That's in addition to the sort of trillion-dollar-plus infrastructure spend that's coming in India across the next five years. Let me turn then to China.
Of course, China in terms of the mining system, obviously coal and iron ore, but also Q&C. Here, one of the interesting trends is the focus on safety. The regulator looking to move the whole market from non-electric dets to EBS, partly as a result of safety, but also to get better reliability in the hands of the miner. Our role there in our JV with our partner is as a premium product supplier. The output from our facility is just terrific. Our customers across the country are looking for Weihai dets as being the most reliable dets, the ones that they can use when they've got a problem.
I think our opportunity there is to utilize this change in the market and see that as our opportunity to again grow market share as the market becomes more educated on the need for sophisticated products. Educated is probably the wrong term. Not educated, but rather appreciating those premium products. If I look across Asia as a whole, in terms of our economic exposure, it's probably about 50%-55% gold and copper, another 25% thermal coal, another 10% Q&C and the rest split among the other commodities, including future facing. How are we placed? How are we going to serve these markets? What you can see on the next page is our manufacturing and supply footprint.
Let me draw your attention at the top of the page, you can see Gomia, you can see Limay. The ones that we didn't have time to put there or space to put there, Weihai, Yinguang, and our new facility in Samarinda. All of these facilities are manufacturing IS & PE, initiating systems and packaged explosives for use across the region. It's a wonderful footprint. It gives us that reliability. In addition, we of course make AN at Bontang in Indonesia, which is just a terrific facility. It's around 10 years old. It's just hit its record production. We are pumping out as much AN as we can to serve that Indonesian market. And that also allows us to serve reliability. Wait, there's more. The logistics assets that we have are really critical.
We have the Cyanide Sparge Station that's just come online in Malaysia. You can see it marked there on the slide. In addition, we have a terrific facility at Subic Bay in the Philippines. Those of you who know Asian logistics will know Subic, one of the great ports of Asia. It's terrific for us to have a facility there in order to be able to serve our clients. This is the hardware, this is the physical installation. In addition, the software, the systems are our people.
Our people are the ones that make this work every day, stitching together the supply of explosives and detonators across the region to keep our clients running in all those different regions, all those different jurisdictions, complying with all the different regulations across the region. I think we're delighted to have this scale that enables us to do that cost effectively for clients. This is what we have as our footprint today. Where are we headed? I think we're delighted with how responsive Asian clients have been to our newer products. I mentioned earlier that our clients are frequently coming to us for those digital solutions. For example, in India, sometimes we're digital first.
We have clients that have come to us, they've bought BlastIQ, and now they're looking to buy other things from us, including explosives, which is just terrific. Likewise, OREPro 3D has been just a repeated winner across Southeast Asia. Every time we've just been discussing that with a client, there's strong interest. Of course, WebGen, we've launched a terrific ongoing campaign with a client around that. Full commercialization. It started with safety. That was the initial discussion, but it has moved to productivity. Of course, 4D. Open cut starting this year, underground next year. I just wanna draw your attention to that final point there. These products only become innovative solutions once they're combined with that local team.
It's our local leaders, not people at a desktop in Melbourne, but rather the local team who know that deposit, know the client, that are able to make this work a solution. A great example in Mongolia, drawbell blast, that critical moment where a mine moves from development to production, and delighted to say that our team there partnered with the client and was able to achieve a fantastic result safely for them. Just a wonderful thing to be a part of and probably the beginning of many years to come in that relationship. This focus on outcome-based contracts across the region.
You know, a half dozen today, but growing in terms of places where we eat our own cooking, where Orica's rewards are tied to our performance under the contract, which is terrific. Maybe the last thing on this page to draw your attention, something that's different in Asia, again, the urban density in India and Philippines in particular. The vibration products, AVM, are just so welcomed by our clients there and an important part of our product suite. We'll be looking to those to continue to enhance going forward. How are you going to see us develop over time? Smarter solutions, obviously we've spoken about that. Optimized operations in terms of scale. In terms of partnering, unsurprising that we need diversity. We need inclusion to succeed.
Customers also wanna partner with us on our outcome-based contracts going forward. An important thing to mention, I've talked about partners in the past. We need to refine and co-invest for joint success. They need to succeed as well as us, and I think we enjoy a great suite of relationships across the region. That's how I'd sum up Asia in a nutshell. Look forward to your questions shortly, but in the meantime, over to another terrific region of LatAm, and over to Brian Gillespie.
Thank you, Adam, and good morning to everyone in the room and those on the webcast. My name is Brian Gillespie, and I've been with Orica for four years, and before I led the LatAm region, I led the GroundProbe business for three years. My background was a little different to most people at Orica. Most of my career has been spent in consulting with Deloitte and PwC, but most recently, I spent four years with DP World and also four years on the board of UnitingCare Queensland, which is the largest not-for-profit in Australia. Latin America may be the part of the world that most people on this call are unfamiliar with, but Latin America is the center of the world's future-facing commodities, and Orica is the number one explosives provider in LatAm.
In recent years, high prices for gold, copper, and iron ore have driven further investment and particularly expansion of existing projects here in the region. The mining sector as a whole is forecast to grow at a very healthy 4% per year for the next five years. Orica's business in LatAm will continue to be focused on copper, gold, and iron ore, and also in the growing Q&C segment, particularly in Brazil. The competitive landscape hasn't changed that much over the last few years, but Orica's further consolidated the number one position through the acquisition of Exsa in 2020, which has been a fantastic addition to the company and really given us scale in Peru, the largest growing market in Latin America.
Orica doesn't manufacture ammonium nitrate in our region, as most of you know, and therefore, as the number one provider, we've got a lot of challenges, but we're also the largest importer and the largest buyer of ammonium nitrate in the region. This actually gives us a lot of flexibility in choosing our supply sources and optimizing the overall supply chain. This scale and flexibility really served us well following the restrictions on Russian imports. I believe that Orica alone, particularly in Peru and Colombia, were able to supply contracted volumes to all our customer base. The biggest change in the region has been the effort that we've put in to improve the quality of earnings by focusing on the EBIT margin and the trade working capital and not just the dollar value of that EBIT.
Most of our customers in the region do value Orica's technology products and security of supply, of course, increasingly, and also our service. The reality is that we did have some customers where price, and unfortunately only price, seemed to matter. Some of the contracts we inherited when we acquired the Exsa business in Peru also had low EBIT margins. For the last 12 months, we've worked really hard to try and ensure that the customer base we have is prepared to pay for value we can generate and not just the price per kilogram of ammonium nitrate. Unfortunately, we've had to exit some contracts in Brazil, Peru, and Chile, and we've had to renegotiate others to make sure that all our remaining customers generate an acceptable margin. This is a change of philosophy.
I personally believe we have a big enough contract portfolio to be a very successful business without having to win new volumes through bidding wars. All our country managers now have permission to exit contracts or product lines where the customer doesn't see any value in our premium products, our expertise or, increasingly, the security of supply. This view is supported by the group CEO, and it really does empower our people on the front line to believe in the value of Orica and be prepared to walk away where we just can't generate acceptable returns for our business. As a result of the last few months' effort, we really do have a much healthier contract portfolio and also a stronger set of customer relationships. At the beginning of this financial year, the Latin American region created a new operating division which we've called Blast Engineering.
We identified 140 technical specialists across the region that previously had been embedded in different parts of our business. These specialists have deep blasting expertise, typically graduates and/or postgraduates, and we've put them all together in a single division, which has become the focal point for specialist blasting services and also the knowledge of all our new technology products because this product portfolio is growing. This division is led by a guy called Dalibor Savkovic. He's a mining engineer with an MBA from the University of Queensland. He previously worked for Vale and Rio Tinto in Australia and the U.S., and he also worked for me at PwC Consulting in Australia. He really is driving a new approach to providing blasting engineering services and also penetrating a fuller customer base with our newer technology.
This year, the revenue and operating margin from new technology products will double that of last year, and the Blast Engineering group is already a genuine point of differentiation in the market. I just don't think this can be matched in depth or scale by anyone else in the region. There are really four main areas of focus to try and ensure that the LatAm region is successful in both the short term and the longer term. I've already talked a bit about quality of earnings, and I've also talked about maximizing our technology growth and differentiation through the Blast Engineering division. The third area of focus is safety, of course, and we are working towards zero serious injuries.
This will always be our aim, and this year, my particular task was to try and bring Exsa in line with all of Orica's safety and environmental standards, and this has been achieved. We're particularly proud of the fact that all ground effluent from former Exsa sites is now 100% recycled or treated. We'll continue to try and eliminate all serious injuries, of course, and also reduce emissions wherever we can. The final area of focus for me in this region is people. Orica and Latam is a remarkable ethnic diversity and a very large proportion of indigenous employees is evident in all of our countries, and we also have many people working in a different country to their country of origin.
However, for gender diversity, we started this year as the lowest-ranking region in Orica, with under 10% of our total workforce being female and only 6% of our people in the field being female. This compares really poorly with the gender balance of the top-tier customer base we have and also compares poorly with the gender balance of the rest of the Orica world. However, by the end of this year, through a tremendous effort of the team, we will have doubled the proportion of female workers in the field from 6%-12%, and by 2024, we want to be at 20%. One particular initiative gives us a lot of pride, and this is our school of operators. We provide a three-month training program for women from outside the industry. We pay full wages during training with a guaranteed job at the end.
We've now run the school in five countries in the region, and we run the school in difficult geographies where some of the people come from very difficult life circumstances. This program offers opportunity, and so far, the success rate is outstanding. That's not the end of the story, but it's a significant kickstart to modernizing our company in the Latin American region. When I look back over the last nine months of this financial year, the things I'm pleased about most is how the team responded to the various supply chain emergencies we had. Dealing with shipping chaos, unavailability of capacity, rates that were three or four times as much as they were at the beginning of the year. A Russian ammonium nitrate export ban, a Ukrainian-Russian war, which extended that ban.
Every twist and turn we've had, the supply chain team and the commercial team has reacted rapidly and decisively, and we've managed to make sure that we didn't delay deliveries to any of our customers. Most importantly, we've not let these shocks distract us from any of the four key objectives that I've been talking about for this year. Well, thank you for the opportunity to talk a little bit about Latin America, the most exciting region in the Orica portfolio, and I'll be available to answer any questions you have later on today.
Well, good morning, everybody. I'm sorry, I can't be in Sydney today, but for those of you who I haven't presented to before, my name is James Bonnor, and I'm the Group Executive and President for the EMEA region. Prior to taking this role on about a year ago, I was in the same role running our North American region. I've been with the company for just on 28 years and had the privilege to work across the globe in many different parts of operations and divisions. I'm gonna talk to you today about the EMEA region and sort of take you through where we're at and where we see the region heading and some of the opportunities that are important to us.
If I look at the region at a sort of macro view in the context of Orica, it's a relatively small part of the business, around 14% of the revenue and 5% of the EBIT, which is as of the first half of this financial year. When we look at it from a revenue perspective, the three sub-regions we operate across EMEA basically have a very similar spread, although that will change as we reset the CIS portfolio, and I'll talk about that a little bit more shortly.
When we look at it from a commodity perspective, the commodity mix is actually very favorable in the EMEA region, where we have a strong exposure to copper, gold, and the quarry and construction markets and a relatively low or very low exposure to the thermal and metallurgical coal market. We also have an emerging opportunity with the future-facing commodities across the region, particularly in Africa, the Iberian Peninsula, and in the Nordics, which we see reserves of cobalt, nickel, zinc, lithium that are gonna be very important into the future. That really gives you an overview of the region.
It's been a particularly difficult 12 months over the last wee while. We've had to deal with some pretty challenging macro environment in the sense of energy markets, which have skyrocketed as a consequence of very tight gas supplies initially. But also compounded by the invasion of Ukraine by Russia, which has resulted in a very high cost of energy and subsequently a very high cost of ammonia, ammonium nitrate, which is a key feedstock to our business. I'll talk a little bit about that later. On top of that, we've had a general spike in inflationary costs and supply chain constraints, somewhat as a consequence of or hangover from the COVID pandemic.
It's a challenging environment, but that all said, we've actually had quite steady volumes in the past few months as we've come out of the winter into the spring and summer months, where we're seeing the typical seasonal uplift. Despite all that, we are seeing volumes improving. If I just, before I move on, I'll just talk about our Russian business. As was mentioned at the half-year results, we are exiting our Russian business. Russia has been a good country for us over the last 20 years. However, the decision's been made, and we are very advanced, actually, in the process of exiting our Russian operations.
We're doing this in a very considered way, ensuring that the safety and security of our staff in Russia, ensuring we meet all the regulatory requirements, and also ensuring that we don't leave our customers hanging when it comes to supply for their mines. That transition is well advanced, and we will hopefully be updating more on that at the full-year results. If I now move to the next slide and really talk about the three subregions in a little bit more detail. The Europe and Middle East subregion is a challenging region in the sense that it's very fragmented.
It's largely quarrying construction. We operate across many countries, and we have been working through a rationalization of some of those countries, really focusing on some core markets in the Europe and Middle East region. We see plenty of potential in the Nordics region. We see a lot of potential in the Middle East, and that's an area that we're developing at the moment. We do face quite a lot of competition from local industry players. There aren't many of the global players operating across Europe and Middle East. We also have an AN market which is 100% sourced from third parties. We rely on partnerships with fertilizer companies for our AN supply across Europe and Middle East.
In Africa, we see a lot of potential and a lot of opportunity. We are underweight when it comes to market share in Africa, and that's something that we intend to improve on. It is a great commodity exposure, both gold, copper, and future-facing commodities we see as very exciting in Africa. It's a challenging market from a geopolitical perspective, and that's something that we have to work hard on. Certainly in recent months has become very tight around ammonium nitrate supply, and something that we've been able to bring value to our customers through security of supply of ammonium nitrate. Then lastly, the CIS, so the Commonwealth of Independent States, we will be, as I mentioned, exiting Russia.
When we look at the CIS post-Russia, we have a very good business in Kazakhstan, and that's one that we've been growing and will continue to grow over the coming years. We're also looking at other opportunities in that sort of Eastern European and also Central Asia market, where there are opportunities that we can go after and grow the CIS subregion and help offset the loss of the Russian business. When we sort of summarize and distill that down into some key points, we really are looking at selective footprint expansion, particularly into Africa, possibly into the CIS. We are really focused on technology differentiation.
Where we do enter these new markets, it will be based on bringing value through our technology to the customers, and we're getting a lot of pull from that, particularly in Africa. We'll be looking at improved margins as a consequence of managing the volatility of our ammonium nitrate sourcing dynamics that we've been having to deal with. Really, looking at long-term structural positions with the change in that ammonium nitrate structure. Moving to the next slide, just to talk a little bit more around technology. We have a lot of opportunities across EMEA for technology. We have a strong customer pull for particularly our digital and WebGen suite of technologies.
We are investing significantly at the moment in recruiting and training our specialists to help drive the adoption and penetration of our digital suite. We are also working on some of the challenges our customers face, particularly from an environmental compliance perspective, working with them to utilize some of our digital technologies to improve the environmental outcomes for their operations. With WebGen, we have a really good portfolio of customer opportunities. We have some mines already operating with WebGen, but we have a lot more underway. We now have the approvals for the European business to progress with the WebGen technology. That's a big opportunity for us across Europe.
Obviously, the enhanced safety and flexibility that WebGen brings to mine operations is something that's very attractive to our customers and obviously the productivity and financial returns that can be generated from utilizing wireless technology. On explosives is an interesting development. That's something we've been pushing particularly into Africa is our SiteFlow technology. That's a technology that really has a very environmental angle to it. It basically takes the waste oil from the mines, and we basically reprocess it and then utilize it in our emulsion formulations. It's a big problem for remote mines to deal with waste oil and something that our SiteFlow technology is proving to be very successful with.
Looking at some of our more specialized bulk emulsions where we have to deal with some challenging environmental conditions. A good example of that recently where we won a large contract in Zambia. We utilized our technology to solve a particular problem around hot and reactive ground for that particular customer. Lastly, electronic blasting systems. I mean, that's an important part of our suite of technologies everywhere around the world. But particularly in Europe, in the tunneling market, we've seen a significant increase in penetration of electronic systems as a consequence of increased regulatory controls around vibration management, dust management. And it's something that we've been able to really utilize the systems to drive our penetration into that market. Continued focus on technology.
We want to win and grow this business across EMEA based on being a technology leader, and that's exactly where we're heading. To summarize, we really are looking at rebalancing our portfolio, leveraging our growth into Africa and other parts of the market to offset our exit from our Russian business. We have optimized our underlying business through restructure on our mining and quarry and construction verticals. We have had a lot of time and effort spent on ensuring security of supply in this very volatile geopolitical environment. I mentioned technology. We continue to grow our technology penetration. We are recruiting more people to support that. We see a lot of potential in the future for our technology portfolio.
Partnering with our customers for some of their ESG goals, really aligning and working together on how we can improve the industry. Like I mentioned, the SiteFlow technology is a good example, but looking at emissions and other improvements in our business that we can all work together on reducing overall environmental impact. Not forgetting also community investment, working with local content in particular countries around the world and using our training and development to broaden skills development across a lot of these emerging countries and ensuring local employment which is an important goal of many of these countries that we're operating in. That's really just a brief summary of the EMEA region. I hope it's been useful and look forward to updating in further financial updates.
Good morning, everyone, and welcome. For those of you who I haven't met, my name's James Crough, and I'm the Group Executive and President of our North American business. I've been with Orica for just over three years now. I started initially in what was the APA business, including nine months as interim president, and then moved across to North America last October. I've worked in the chemicals industry for over 15 years now and had the privilege of working across a number of countries, including Australia, New Zealand, Asia, North America, and parts of Europe. Today, I'll give you an overview of the North American mining market, the current business conditions, and the outlook for our North American business. On the first slide, you'll see North America is the second largest region within Orica, accounting for close to a quarter of Orica's sales volumes, revenue, and EBIT.
The commodity mix in North America is well-balanced, with a strong weighting towards hard rock metals in quarry and construction, with thermal coal now representing around 12% of our portfolio. The key strategic advantages, I would say, that characterize the North American business is the diverse range of commodities that we operate in, and we do this across a very challenging geographic market. Orica has an unmatched position across the region. Just to give you some context on the size of our business, we have access to over 1.5 million tons of ammonium nitrate supply, either in-house or through third parties. Our IS and EBS manufacturing plants, including Brownsburg in Canada, is the largest EBS plant anywhere in the world.
We have 16 emulsion plants, with many of these on customer sites, and over 100 of what we call downstream sites, including rail transloads and distribution centers. Being able to operate safely, supporting our customers all the way from the Arctic Circle through to southern Mexico with an established asset base is essential in this market. The competitive advantage generated from this is unmatched in the industry. Finally, in terms of mining, North America has an abundance of high-quality mineral reserves with relatively low sovereign risk. This generates a very positive environment for mining investment. As I mentioned, one of our key strategic advantages is our geographic spread.
As you can see on the next slide, each of the countries within the North American region have their own individual opportunities, challenges, and what is most important to our customers varies depending on the sector. In terms of the United States, we've been very well-positioned through our joint venture, Southwest Energy, to support increased metals production in Arizona and Nevada. Driven by record metal prices and also an increase in coal demand in the Powder River Basin in Appalachia through our joint venture partner in Nelson Brothers. Just incidentally, we've seen a medium-term rally of thermal coal demand due to high domestic natural gas prices in the US, driven by increased LNG exports to Europe, a direct result of the Russia-Ukraine conflict, as James just mentioned previously. In terms of our Canadian business, this really is a gem in the Orica portfolio.
Through our Carseland facility, we have an excellent manufacturing footprint, combined with deep long-term relationships with First Nation customers, which is critical to being successful across a number of very remote mining locations throughout Canada. Environmental license to operate and the use of low carbon-intensive mining inputs is becoming critical to our customers within the region. The investments in carbon abatement technology at Carseland and nitrate-containing products such as Fortis Protect are critical for Orica in helping to support our customers in a changing ESG environment. Lastly, while our Mexican business is the smallest country in the region, it still represents an important contribution. Strong supply positions with AN sourced from a local producer, together with IS packaged and bulk explosive supplied from our Cuatro Ciénegas plant in the north of the country, provides significant security of supply across a full range of products for our customers.
Also, the adoption of technology solutions by more and more value buyer-type customers looking to reduce dilution, improve fragmentation, and improve wall control is very encouraging. Our geographic spread, security of AN supply, and technology providing smarter solutions for our customers that reduces their overall mining costs are what sets Orica apart within the region. Turning to the next slide, I guess the question is, in a mature market, where is the growth going to come from? Looking at the map, in the U.S., as I said earlier, Orica is well-positioned in the Southwest metals market. On top of this, new gold mining growth in Alaska is very promising given our existing customer relationships, and Orica has the technology to support our customers in what is a highly sensitive location in terms of ESG.
We have exciting opportunities to grow in the Q&C sector, both in Texas and Florida, two of the largest crushed stone markets in the U.S., and this will be further supported by the U.S. infrastructure bill that was passed by Congress last year. In terms of the Canadian market, what's exciting is the investment in greenfield gold projects in British Columbia, along with restarts in recent years in the iron ore mines up in eastern Canada and the metallurgical mines in Alberta. On top of this are the lithium and iron ore projects within the Ring of Fire in Ontario. If you look at the sheer number of prospective projects in eastern Canada, it is very clear that Carseland is very well-positioned to competitively service these mines, and this very much supports the feasibility work that we're currently doing in looking to debottleneck the plant.
Finally, mining activity in Mexico is improving. Orica is well-positioned in terms of domestic local supply, particularly given a number of supply contracts for mines in the region are expiring in the next 12 months and have been significantly impacted recently by international supply chain disruptions. This just emphasizes the strategic advantage of reliable in-country supply, coupled with a well-developed technology offering. Turning to the next slide. Orica is the undisputed market leader when it comes to technological advancements that solve difficult mining problems for our customers. The North American team have done a fantastic job bringing these products and services to market. In terms of WebGen, this year we'll have blasted our highest number of underground stopes using the most number of diverse mining methods.
In fact, one enterprise customer has redesigned their mine plan based off using WebGen as a service, and we've been able to lift ore recovery from an average of 90% last year to 97% this year with a 13% reduction in dilution, and this is currently their biggest mining problem. In the bulk explosive space, what's most important to our customers on the ESG side is supporting their license to operate through precise blast control and also an expanded product range that meets the flexibility of required blast outcomes. Two great examples for me are Fortis Protect and the growing adoption within the Canadian market due to the need to limit fuming and potential nitrate runoff, and 4D, a product that delivers variable explosives energy automatically adjusted within a single blast hole.
What's really interesting is, based off customer feedback, we're currently working on a combination of these two products specifically for use in the Q&C segment. Lastly, in the digital space, we've seen a significant increase in sales of OREPro, FRAGTrack, BlastIQ, and 3vGeomatics across all regions, particularly in the U.S. and Mexico. As a result of this, we're increasing the size of our digital sales team to further support our customers. As I said earlier, Orica is the undisputed market leader in this field. Positively to the North American region, our customers are some of the most innovative globally. Turning to the last slide, in terms of the key priorities for the region and outlook, we are well-positioned for further profitable growth.
As the market leader, it is critically important that we're disciplined when it comes to our pricing strategy as our contracts renew over the coming years. This has never been more important given the current highly inflationary environment and what is looking like being a short market for at least the medium term. To support our focus on pricing discipline, now that we've reached and are moving beyond stabilization, our new SAP system is starting to provide new insight into contract and site profitability, and this is having a very positive impact through our pricing strategy. Partnering for progress is critical to our success. At our Carseland facility, in partnership with the Alberta government, we've made significant investments in reducing our greenhouse gas emissions through tertiary abatement technology.
Positively, our major suppliers are also investing to reduce their scope one emissions, and we're working together to produce low carbon intensive products for our industry. This, I think, will soon be a license to operate. In terms of safety, North America has led the way with the rollout and adoption of our major hazard management program with very positive results. We're now replicating this at our Carseland plant, and we'll have this completed by the end of the year. Finally, and most importantly, I've been incredibly impressed by the capability, resilience, and tenacity of our people in North America.
One of the most important things the leadership team and I do every day is develop the next generation of Orica leaders. Taking bold action to improve diversity, equity and inclusion, and provide development opportunities for our key talent. Right behind safety, this is my and the team's highest priority. Hopefully you can see the region is well-positioned for growth. With that, I'll now hand back to Delphine.
Thanks, James. So those were the five regions that you just heard from. Now we'll turn to the next vertical, quarry and construction. In the Q&C sector, integrated processes are the key to unlocking greater productivity, profitability, and more importantly, sustainable outcomes. This will play a crucial role across the quarries of the future. In this video you're gonna have a look at now, it's from a quarry customer in New Zealand, Stevenson, on how they're harnessing our FRAGTrack technology to monitor the size of the rock through the crusher and optimize blasting to increase productivity and sustainable outcomes, thereby reducing the overall carbon footprint of the operation dramatically. Let's have a look at this video.
FRAGTrack's is allowing us to get information that we've never typically had. What we're getting out of it so far is huge information to understand our rock better and our resources. This is actually data that we can feed back and analyze, and that's pretty revolutionary. It's exciting. FRAGTrack is a tool that Orica has developed to measure fragmentation. We can change and adapt our blast design to match what the crusher is requiring. Very empowering for both companies to undertake projects collectively, such as what we do here at Stevenson Aggregates. We're using FRAGTrack, we can monitor the size of the rock coming in there and the grading of the rock. We kinda know where the product's gonna end up, whether it goes out to the left for our scalping or goes forward to our tertiary crushing.
The FRAGTrack unit is mounted at the top of the primary crusher feed. The cameras can measure particle sizing. As the truck is backing into the primary hopper, the camera takes an image of the truck as it's tipping on a certain angle. The camera's capturing 3D imagery of the particle sizing of each truck. It's taking a sample that it can then process and analyze. FRAGTrack's making a big influence on our production and our decisions, and we're able to catch things a lot earlier and adjust them to suit. The 3D imagery and data is then sent to BlastIQ Insights in real time. The fact that we can just compare and we can optimize our blasts and then get more throughput, so saves us money. It's one login, and you've got all that information in one tool. You're not searching through multiple portals or anything.
Now we can actually look back and say, "Well, that's what the blast looked like coming into the plant, and we got this much production out of the plant. They can test us against what we are doing through the BlastIQ and FRAGTrack as well, so it's there in real time for them to look at and explore. You know, if we can reduce our carbon output for the products that we make, it's just fantastic.
I'll now introduce James Bonnor back to talk to us about Quarry and Construction.
Well, thanks, Delphine, and good morning once again, everybody. It's my pleasure to talk to you this morning about the Q&C market. About 12 months ago, with our strategy refresh, we've determined to set up the quarry and construction as a strategic vertical across the business. This will enable greater focus across the various regions on the quarry and construction sector. Now, why do we think that's important? Well, we believe with dedicated focus into this area, we can improve our overall returns through basically leveraging our existing market positions across the markets that we're operating in the Q&C segment already, and developing new positions into some of the emerging markets around the globe.
Leveraging some of our technology that we haven't been applying as actively into the Q&C market, being more proactive on that and really looking at l everaging our operational footprint and best practice across the globe to ensure we can grow this market segment. I'm gonna talk to you about this over the next 15 minutes on how we're going to go about that. If we move to just sort of macro context of the Q&C market, and the fundamentals of this market is that there is going to be increased spend across the globe in quarry and construction over the coming decade. When we talk about quarry and construction, we particularly mean quarries, we mean construction, but we also mean underground tunneling as being a very important part of that segment.
If you look at it from a materials move perspective, it's actually got the largest compound growth of all the commodities that we deal with. It's important and attractive for us to be involved in. You look at some of the markets where we're seeing a lot of the growth that's in some of the mature markets, like the United States and Europe, but also some of the emerging markets in countries such as India and across Southeast Asia. We certainly see this market as a growing market and one that we can extract more value from. Tunneling is a large market, and I'll talk a little bit more about tunneling later. It's large, but it's also growing.
It's a market that we do want to get involved more in. When you look at our operations from a global perspective, we already have Q&C operations in many countries around the world. I've highlighted the ones where we've sort of got more mature markets and mature operations. From a revenue perspective, the Q&C market represents 14% of the total revenue of Orica. We estimate the market for explosives into the Q&C sector is around AUD 4 billion, which is smaller to the larger mining explosives market, but important all the same and one that we should be getting our share of. It is a fairly fragmented market, and it's more regionally or country-driven.
You don't tend to see the big global players in the Q&C market like you do see in the mining market. We have both direct and indirect channels across the market, and that's a characteristic of the market. The customers vary in size from large sort of corporate quarries to small, privately owned mom-and-pop type independent quarries. While they're quite different profiles of operations, they have sort of common needs around ensuring we can deliver reliable blast outcomes and optimize their blasting costs. When we look at the construction market and the customers in that market, it's very much in urban environments, and it's very much more sensitive type environments from an environmental compliance perspective.
Precision blasting becomes a key driver of that type of market segment. Customers have very high expectations around responsiveness and reliability. We need to be able to grow on the back of our mining business into these Q&C segments where they're correlated, co-located, and also where they are not. Technology will be a key enabler in pulling together the various elements of our technology to drive that growth into that segment. If we move more specifically, I wanted to talk about tunneling.
As many of the cities around the world look to future-proof their infrastructure, and we're seeing this a lot right now in existing cities, but also emerging cities as they plan their infrastructure for the future, underground tunneling is becoming a really important part of that. It's a huge market globally, around $140 billion and over 5,000 kilometers of tunneling completed in 2019. Drill and blast is still an important part of the tunneling market, and particularly in challenging geological environments where there's very hard rock or very diverse rock, the blasting becomes a very key part of how we operate.
Underground civil tunneling is used across, you know, railroad, transportation, strategic storage of critical commodities, which is a market segment we see as growing over the coming years, and obviously, projects like hydroelectric power projects. A large and important segment that we do want to be part of. We've seen significant growth across the tunneling market in recent years. Some good examples are Singapore, Hong Kong, Seoul, Tokyo, parts of Saudi Arabia, where land constraints and restrictions have to be considered when looking at the options of how to operate infrastructure across these large and complex cities. I mentioned the growth in underground energy storage. Strategic storage of the likes of oil will become more and more important.
I think more and more countries will be looking at moving a lot of that strategic storage underground. That in turn is a really big opportunity for us to get involved and we have been involved in some of these projects in the past. Just coming back to the Q&C sector and looking at our sort of a couple examples from both the mature markets and the growth markets. If I highlight the U.S. market, which I know well, it's a very large Q&C market and it's being fueled currently by a significant infrastructure commitment from the federal government in the U.S. with the infrastructure bill from 2021.
We're seeing that manifest itself now in the Q&C market in growth that we're involved in. It's a mature market. Orica is one of the market leaders in the U.S. market, and we operate through both our direct and indirect channels, and we sort of manage that through the markets across the various states across the U.S. There's a strong technical pull for value from these customers, and we're seeing that increase as quarrying becomes more complex and environmental constraints increase. The underground Q&C segment is one that we certainly are looking at, increasing our penetration in the United States.
Another core market for us is the Nordics, and this is an important market both from a quarry and construction, but also a tunneling perspective, particularly in Norway. There's a high focus on environmental compliance, and something that we've been very successful with in that particular market. When I look at some of the growth regions, India is a significant growth opportunity for us. There's a commitment to infrastructure spending over the coming decade of around $1.5 trillion, so an enormous amount of funds being committed to infrastructure spend. That's gonna be important that we're part of that.
It's a pretty immature market from a technology perspective, and introducing the likes of our electronic blasting systems and really partnering with some of the core infrastructure contractors into that market segment, we see as key in really positioning ourselves as a technology leader, being able to provide more efficient and productive blasting outcomes while also meeting a lot of the challenging environmental constraints. Not losing sight in India of the potential for underground tunneling projects. Just lastly, to talk about one of the other key growth regions that we see is Southeast Asia. With the emerging economies in this part of the world and government spending on both private and government spending on infrastructure, we see this as a really attractive growth market for us.
We have pretty solid positions in some of the countries across Southeast Asia, like Indonesia, Malaysia, and the Philippines. There are other countries where we can probably look at more direct operations as well or look at indirect alternatives to penetrate into those other countries where we're not currently operating in. As I mentioned earlier on, the civil tunneling market in Southeast Asia is a very important and large market that we intend to grow our market share in utilizing our electronics and bulk systems. When you look at it from an industry perspective and the customer needs, you know, civil tunneling is all about speed of completion, but in a very safe and environmentally compliant way.
Our technology suite really does come together extremely well into civil tunneling, along with our expertise that we have in parts of the globe. We need to share that best practice across the globe and grow into this market segment. When we're looking at the quarrying operations, a lot of it's about productivity, production volume and but meeting those tight environmental compliance regulations and something that again, our technical and operational expertise really gives us an edge into that market segment. Lastly, the urban construction market is something that a market segment that we certainly want to grow a share of.
We believe with the real precise controlled blasting techniques we can bring to that segment and have successfully executed in many parts of the world, we can broaden that around the globe. A big part of that is really demonstrating some of those solutions from a compliance, environmental compliance perspective, and continuing to lift the standards in that regard. Finally, to summarize what we bring, why do we think we can be more successful into the quarry and construction market segments. Well, we have industry-leading people. We all know that expertise where we're not applying into the Q&C market, we can easily transfer it. We have strong relationships. We need to broaden those in some of the core emerging markets.
We have a great product range, and we have a flexibility in our operating model to be able to adapt to different market segments, and different country requirements as we grow across Q&C. Our global reach is a strength for our mining business, of course, but it's also a strength for our Q&C segment. We have global reach. We also have local knowledge and either directly or indirectly through our partners, and we can utilize that reach to succeed. Lastly on that point, we have a very strong ammonium nitrate supply network, and that's very important as a key raw material into any of the explosives markets we choose to operate in.
Lastly, our commitment to sustainability and really working with our partners around environmental compliance, and ensuring that we're collaborating and partnering with emissions reductions and working together on achieving those goals that we all must focus on. Underpinning all of that, of course, is safety is our priority always, and we'll never lose sight of that. If we can't operate our operation safely, then we won't be doing it. That's really it from the Q&C vertical. I hope it's been useful, and I'll look forward to updating you in the future on our success and growth into this key market segment. Thank you.
Thank you, James. Let's open up to Q&A. We'll start from those on the line. We've got about 11 questions online, but let's go to the first three that have been upvoted. Sanjeev, I think I'll start with the first one. AusPAC has been in a pricing-led downgrade cycle for a decade. What's the outlook for pricing? Net pricing more useful? They wanted a net pricing perspective, assuming we can pass through the higher costs. Why don't you start, and we'll throw it to Germán.
Yeah. I think I've commented extensively on this. There was a history, there was a reason. We were building new factories. We were filling new capacities in the past, and we were chasing volumes. Those days are over. I think I said this in the first half that the plants are sold out, capacities are sold out. I think Adam mentioned that we have record production at in Indonesia and Bontang. We do not have volumes to chase, and we don't intend to do that. Brian in Latin America also mentioned that today we are more than happy to walk away from business if it does not fulfill our own internal requirements in terms of returns and profitability. Customers do appreciate the fact that we are reliable.
We bring in all the technology that we talked about, and there is a much higher willingness to pay. Yes, there was a history, there was a certain reason for that. I think I've tried to explain that several times today, so I'm not spending more time on history here. Going forward, I think every region and every president mentioned commercial discipline, and that's topmost and foremost in terms of the way we operate in the market as a price leader and as a market leader. Germán, on Australia, do you want to make any comments?
I think you covered the question fairly well, but just, you know, to answer in two groups. One is existing contracts. We have rise up of formulas in the contracts, and we execute them with discipline, and that's where we transfer the input costs. The second one will be the new contracts. Any new contract, normally on a one-on-one basis, if they are large or at minimum on a quarterly basis in our pricing policy, they are updated and reviewed in the light of what's going on in the market and what is the next best alternative for our customers. As import parity has increased in Australia significantly, as we have seen a big, practically a dry out of imports into Australia, the market has become tighter, and this has been reflected in the pricing policies.
Thanks, Germán. The next two questions, James Bonnor, I think these are for you. The first one is, with 28 years at Orica, how is the current Orica different from previous versions? The second question for you is, where is the AN coming from that you replaced Russian AN with? James Bonnor?
Thanks, Delphine. Look, you know, 28 years, Orica's changed a lot from ICI Australia to a diversified chemicals company, essentially, to a globally focused mining services company. I think what's really starting to emerge, and it's taken a long time, these transformations don't happen overnight. What's starting to emerge now is we really are now tying together a lot of really strong points of competitive advantage. Firstly, our global reach, and I think it's become very apparent in the pandemic, has been a real advantage for us. We are able to sustain our supply into the regions where we don't have domestic production, like Africa, Latin America, and our customers really have valued that.
It's been a very tough thing to manage, but I think our reach versus a lot of our probably more regional competitors has really been an advantage. Probably where the main area of competitive advantage which we're driving is we're finally tying together the digital suite. What I mean by that is it's not just being able to create a lot of data, it's what we do with the data. In particular, we talked about FRAGTrack as an example. Being able to measure the benefits we create for our customers. It's all very good going in and saying, "We can blast better. We can give you better blast outcomes," but it's all about showing me the money.
To me, the emergence of some of our digital technologies which provide very accurate data around measurement of benefit, measurement of performance is something that I think we can now extract more and more value in collaboration with our customers, where we will benefit as well as our customers through being able to demonstrate that value. Sort of tying together that global reach and that global focus, bringing that technology to the table, but actually being able to demonstrate the value, that's the big shift I think in probably the last four or five years, and we continue to build on that. I'm sure Angus will talk more about that later.
The second question regarding ammonium nitrate supply, we've had networks across the world with ammonium nitrate. We haven't always been solely beholden to Russian supply. We've sourced product from multiple sources, including Spain, Sweden. We've sourced product from Lithuania, Georgia. There is ammonium nitrate capacity out there, and our network's been able to tap into that, react very quickly and ensure that we can, you know, meet those demand needs of customers, with the constraints around Russian exports moving. Moving forward, we back ourselves to be able to continue to do that.
Thanks, James. We've got Leah Barlow in the room. She heads up supply and manufacturing. Leah, do you wanna add anything to what James just said?
Yeah, sure. Just to complement that, Germán Baeza actually mentioned it in his presentation, where we've actually converted from Nitropril to Anopril, which allows us to melt the product. We've been able to leverage, particularly in the height of the Russian crisis, being able to ship AN out of our facilities in Australia into LatAm and Africa. At the same time, it's not about just trying to unlock more capacity at a plant. It's about unlocking the capacity from the network, 'cause that has been the biggest challenge, and it's been around shipping efficiencies, it's been about understanding how to move the distribution network in region, and it's also about being flexible in the production.
Thanks, Leah. Let's take some questions from the room. If you have a question, can you put your hand up, please, and we'll get a microphone to you. We've got a couple at the back.
Morning. It's Paul McTaggart from Citigroup. Future facing commodities, Chile in particular. I wanted to get your sense on, you know, how you think that plays out in terms of Chile's ability to be competitive globally in copper production in the future.
Yeah, it's a good question, and I'll ask Brian to comment on it. Brian and I always have a joke. He said whenever we talk about Latin American business, don't talk about geopolitics. That's business as usual for you. It's the same for everybody, right? We found a way to operate in an environment where there is unpredictability, there are strikes happening, there's social unrest. Our customers shut down overnight. Our supply chains, teams are so very well trained today, with the hardships of operating in Latin America that this has just become like, unfortunately like COVID, it's become business as usual. On the specific issue of Chile, I'll let Brian. He's the expert, he'll talk about it.
Social unrest, the shifts of governments moving more towards the left, we've seen that in the past, and this will continue in the future. The one positive that I can say about Latin America is that all economies there do understand the value of the mining sector. Whatever challenges are thrown at that sector, the sector's always shown resilience. There is a very, very strong demand for the products that come out of Latin America, especially because somebody has to fill the hole that Russia leaves behind. Whether this is Africa, Latin America, there are opportunities. Asia, there are opportunities across the globe. Governments see this, and it's a source of revenue, it's a source of employment and tax income. This sector's always found a way to operate. Brian, more on Chile?
Yeah. Look, Sanjeev, I mean, you're right. We found a way to operate here and of course, when you talk about the proposed mining royalties in Chile, you still have to get in context that Chile is the most stable regime with the most established projects in Latin America. You know, I look at the outlook here, I see it as remarkably stable. There's a lot of representation being made right now by the major mining companies to the Chilean government about the potential negative impact on future investment of these proposed increased royalties, particularly around lithium. In terms of the next five years, you know, what I see and certainly what the leaders of the mining industry see here is stability.
The one thing that may affect that is this government, new government's also got a strong environmental bent, and they have pushed back on a couple of project expansions recently because those expansions haven't had the right provision for water reuse. Water is a scarce resource, particularly in the middle of Chile. In terms of the overall outlook, our models are of growth, stable growth for the next four to five years. Our investment program is geared towards that, and I think it's the same for all the major mining companies. If you're following Chile, I think you're following a very stable region.
Thanks, Brian. A question from Scott.
Hi there. Sorry. Right up the back, Scott Ryall from Rimor Equity Research. I was hoping to ask a question on the mining side as well. I'm wondering just with James's comment about being able to link up data and outcomes for customers, are you expecting over the coming five to 10 years more of those sort of profit sharing, if I can call it, arrangements with customers? Related to that, there was a few comments made about sustainability, and I wonder if you could just share, is the major focus for mining customers around sustainability to do with increased efficiency that takes out their carbon footprint? Or is there a willingness to pay for just straight decarbonization of their supply chain as well?
Well, great questions. Monetizing data is something that Orica's becoming pretty good at doing. We help mine commodities and we help mine data, and we create value out of data. The future's all about data, right? Because first of all, to know. Secondly, to answer the question, so what? Thirdly, what is the outcome? I like the term profit sharing.
We call it value sharing, and that's what we do with our customers, where we say, "If we help you either save costs or improve productivity and improve your financial performance, there's a certain portion of that value that should flow back to us so that we can continue to reinvest in this kind of technology." As you can imagine, these are not easy discussions, but we do manage to get checks every quarter from customers, so that model is working. We're scaling it up. I'd like to hand over to Angus to talk about data and how we are monetizing data.
Yeah, thanks, Sanjeev. Look, I'll cover it a bit more in the talk, but in terms of the commercial playbook around our digital products, we really have three tiers of it. At the base level, this is a discrete payment for each of those products and services. This is typically software as a service, so these are standalone profitable. The second tier is where we bundle two or more of those together, and again, that'll be a discrete price around that offering. Then the third tier is more the performance-based, outcome-based projects. We have a number of those that are embedded that are highly profitable for us.
I would say more broadly across the business, and I'll give you an example from Brian's area in Latin America, where we have a lot of rock and ground and outcome-based contracts. We've deployed first and foremost our own technology through that. Brian is using all of the digital tools through his blasting engineering group to underpin our outcome-based contracts. There's many avenues to monetize the digital products and services.
On the, uh-
Sorry, you expect an increase over the coming five to 10 years of the utilization of these sort of mechanisms?
Absolutely. That's going to be the model of the future, where we will sell products, services, and outcomes to our customers. Customers still have the option of selecting one or the other or all of them, right? We've already had now the first successes in terms of commercial contracts, including end-to-end offerings designed for outcome or whatever you want to call that, where we have products, services, and data all in, into the contracts, and then we have the value-sharing mechanism. That's the way moving forward. In the past, the commercial model was value guarantees, and we are getting away from value guarantees, and we are moving to value share.
Because in my view, value guarantees are a one-way contract that's not equitable, where the risk is all with Orica and the benefits are all with our partners, and that's not, in my view, a collaborative business model and not sustainable going forward. We'll move forward to the value share or profit share model, as you called it, and we'll start to roll that out across the globe. All future tenders and renewals and everything else will start with that baseline, and then we'll see what the customer feels comfortable with. The second question on sustainability, the answer is both. On one hand, there is a lot of value in the license to operate, because with high commodity prices and customers in most regions falling behind mine plans, there's an urgent need to catch up.
The second one is obviously to manage ESG expectations of our customers, stakeholders, including their boards and their shareholders. We have great examples of both. I think each region can talk about this, but the most prominent one, I think, was from James in North America. James, you want to talk about your low carbon offerings as well as the license to operate challenges in Canada?
Yeah, thanks, Sanjeev, and thanks for the question. I mean, I guess an example would be Fortis Protect and the success we've had in Canada. A number of our Canadian customers, one very large one in particular, has an issue with nitrates runoff, and that is particularly sensitive from an ESG perspective in Canada. Where the product came from was literally one of our technologists here, our product manager, working with the customer to understand their problem and coming up with different formulations in the mix laboratory here in Denver in terms of an emulsion. What they came up with was our highest viscous emulsion that can be transported and pumped through a mini mix plant and through the hose on an MMU that because of the viscosity of the product, when you blast, it both limits fume and it limits nitrates runoff.
We've done some marketing on that product, but literally word of mouth of the success of the product has spread through Canada, and we're seeing increased sales across a number of customers in Canada. Another one that we have, Canadian customer uses plastic hole lining to try and limit nitrates runoff. Now, that stops nitrates runoff, but when you blast, it leaves plastic all over the bench, which is another ESG issue, and they're also converting to Fortis Protect. We've been able to charge it as a premium product. That, that's been a great success in the Canadian business. In terms of the product itself, I think naturally over time, a license to operate in particular tenders will be that you can offer a low carbon intensive product.
We've been able to demonstrate that out of Carseland with the investment that we've made around our abatement system that is running 2% or 3% ahead of its business case, and we're producing a low carbon AN. In a broad meeting with one of our enterprise customers recently in the US business, they casually dropped that going forward in a number of years, that being able to demonstrate you can supply a low carbon intensive AN will be a ticket to participate in the tender itself. We've made great progress out of Carseland, and we're working with our Scope 3 suppliers, and they're doing work around carbon capture, CO2 abatement, green and blue ammonia.
Thanks, Jamie. We've got one question from the room, and then we'll take a break. Richard?
Thank you. I might just sneak a couple in if I can.
Okay.
It's Richard Johnson from Jefferies. My first question's for Adam on Indonesia, and I was just wondering if you could talk through a little bit about the supply-demand balance in Indonesia and whether I'm presuming the new plant there is import replacement. I'm curious as to whether your contracts there are restricted by your ability to supply AN or not out of Bontang or not.
Thanks very much for the question. Supply and demand balance in Indonesia, Bontang is clearly the largest plant. It is a majority of the AN production in Indonesia. The new plant is roughly in the order of 20%, 25% of the size of Bontang. It is import replacement. It will move Indonesia from being an import AN market to net broadly balanced market is probably the right way to think about it, but potentially a small import, potentially a small exporter. That's a challenge that we look forward to tackling. Next question you had was, I think that you were asking about the tie of, are the contracts Bontang-specific? Is that? Was that your question? The mining contracts in Indonesia?
Yeah, kind of. I was just trying to get a sense of what the underlying market growth or your growth is, particularly out of your coal customers there, and whether that's your ability to grow is restricted at all by the supply side.
I mean, the volumes we see of AN are not actually critical to growth given the other products that are coming through the pipeline. The Indonesian miners at the moment, they're delighted to work with us. We've got a great presence with them. AN's part of that. More and more, we're moving towards a premium opportunity. You know, the solutions that are in the pipeline from whether it's WebGen or 4D are really what's driving margin growth for us in Indonesia. Yeah.
That's great. Thank you. If I could just sneak two in for James, please.
Two for me?
Yeah. Is that all right?
You've got a question this side, too, and then we'll finish.
James, I think you said that you were expecting growth in Africa to broadly offset the loss of Russia. I was just wondering if you could put a timing around that, please?
We think around a couple of years, maybe three. We're pushing hard. We also see other opportunities across Western Europe. I mentioned the Middle East and potentially Central Asia as other potential opportunities to offset the Russian reductions. two to three years, I think is a reasonable timeframe.
Great. Thanks. Then just on your presentation on Q&C, when I think about the opportunity in Asia, where you're presumably underrepresented, I mean, would I be right in thinking that the current suppliers there are relatively small regional people and they may well source their AN from you? You actually know where the contracts actually are, which will enable you to sort of short-circuit the whole thing.
I think it's a mix, and Adam may want to add to this, but there's a number of smaller regional players, almost country-based players in Southeast Asia. Some of them, yes, we are wholesaling to those types of organizations. Our preference to really extract more value from those markets will be to take more direct positions, most likely. Or we could collaborate with them as sort of exclusive distributors or whatever we think is the right channel to market. But I don't know if you wanted to add to that, Adam.
Yeah, sure. Philippines, Malaysia, absolutely, we're already seen as their key Q&C provider. We've got a great local partner in each of those markets. We're delighted to be with them. In India, we're not really so much a source of AN as a source of EBS and detonators. India Q&C projects occasionally using EBS, which is rare and something that we're delighted to supply them on, as well as premium dets, which again, that's the relationship that we might have with the ultimate quarries at the moment. I think plenty of scope for growth in Q&C, particularly in India with that, you know, sort of $1 trillion of infrastructure spend coming.
It's a positive conversation because the market's growing so fast. The construction companies, the companies that are deploying the aggregate, they're looking for conversations about growth. They're looking for conversations about productivity. It's not really undercutting each other on market prices. It's much rather how do we cope with the growth that's coming towards the market.
That's very helpful. Thank you very much.
Maybe, Richard, just to add this, model in India to grow infrastructure is public-private partnerships. The team has won a few new businesses building new international airports and terminals across the country, so it's extremely attractive. This is state-sponsored, but together with the private construction companies in India, it's a very organized sector with a lot of scale in it, so there's fantastic opportunities there. They obviously want to operate at the highest levels of safety. I would say the Q&C regulators there are much more aggressive than the mining regulators in India. They are much more open to pay for new technologies and EBS and everything else. That's been really exciting.
Thanks, Sanjeev. We've had a question from the right. Is that?
Yeah.
Andrew, thank you.
Hi. Andrew Scott, Morgan Stanley. Just a question for Jamie on North America. A slightly different in the way that you operate in the market there, given some reasonable joint venture operations. Just interested to the extent that. It's obviously served you well, but that does still make sense going forward, particularly as you increase the sort of technology and sophistication of your operations there.
Yeah. Look, thanks for the question. I've been very impressed with the capability of both of our major joint ventures, both in the metal space and the coal space. If you look at. If you look at the quality of the customer relationships that they have, if you look at the service efficiency that they apply, if you look at the way that they sell technology, and you look at one in particular, the diversification of their business, that they are great business partners.
Our partner in the West, if you look at what they've done in terms of EBS penetration, we wouldn't have got there without them. You look at our partner in the coal space, and the level of market share that they've grown and the returns they're generating, I've been very impressed. I think they're great strategic partners. I don't see any reasons to move away from that. We're looking at an opportunity in the Q&C space.
We have a great sales force in the Q&C space. We have great security of supply. We have a great technology offering. We need to do more work on the manufacturing side around emulsion plants, and we're partnering with one of our key joint venture partners to grow in the Q&C space together. I think they've been tremendous partners for the business to date.
Partnering for progress is a key enabler for us as part of our strategy, and North America is a fantastic example. It's a model we'll also bring to other parts of the world where we are going to grow the business because we do not have to do everything ourselves. Sometimes the channel to market might be a partner who's much better positioned than we are, and they are basically our hands and feet on the ground, and they have the capacity to breathe. It gives us a lot more flexibility, and I think it's a fantastic success that we've had in North America. Adam is also looking into Asia, for example, given the wide geography.
James is looking into Europe to see whether we can also do better partnership models, given his success in North America, to bring that model also to Western Europe. Yes, it's been a very pleasing progression with those two partners there.
Thanks, Sanjeev. That concludes this section. Let's take, say, a 12-minute break and come back at 10 minutes past 11 for the next session. Grab a cup of tea for those in the room, and there's something to eat too. Thank you. Well, welcome back, everyone. Let's get into the next section, which starts with digital solutions. Before we dive into that vertical, we just wanted to share a recent key milestone that was achieved by one of our latest blasting technologies. In this video, you'll see Avatel, our mechanized development charging system, remotely loading our second-generation wireless initiation technology, WebGen, in blast holes for the first time ever. This occurred only a couple of weeks ago in our key partner, Epiroc's test mine in Sweden.
It's the first time in the world a wireless initiation device has been recorded loading remotely into a blast hole. This is a significant milestone for the technology and for mining industry. Let's have a look at this.
Thank you, Delphine. Sanjeev mentioned partnering for progress, and that's just one of the examples of our industry partners with Epiroc, who we've been working with on that piece of technology for the last couple of years. It's really exciting. We've got two prototype units. The one you just saw, which we've just tested in Sweden over the last month, and we've just got one that's arrived in Australia. Thanks for joining us today. My name's Angus Melbourne, Orica's Chief Technology Officer, with accountability for development and execution of our technology strategy and our digital solutions business. I'm in my seventh year with Orica. I started in the Australia-Asia Pacific business as president, and then I moved into developing and commercializing our technology programs.
Over that time, I've also overseen parts of the business, including China, and launching and overseeing our digital solutions business. Now, for customer-facing technology, the strategy focuses on three streams of development. The first one is advanced blasting products, and that's built on 140 years of innovation and blasting expertise. Autonomous blasting systems, and this is really about eliminating the manual work processes that drives safety and productivity. Then the third is digital solutions. This is the sensors, software, and data science that we deploy in our blasting operations, upstream and downstream in adjacencies, and in integrating workflows across the mining value chain. Now, the first of these two streams, I'm not gonna cover today.
We're really excited to have some of you tomorrow at the Kurri Kurri Technical Centre, where we'll really showcase a lot of those blasting and digital technologies. I think also my colleagues have covered extremely well our more recent blasting advanced blasting products like WebGen and 4D because we are in the commercialization phase. We are scaling both of those technologies and getting real traction. The focus of my presentation today is on the third stream, which is Orica Digital Solutions. Now, like many sectors, mining is being rapidly reimagined, and it is a really exciting time to be in the industry. Now, mining has been a little late to the party compared to some of the other industries, but it's rapidly making up for lost time.
Digital technologies are now delivering significant advances in safety, productivity, and environmental outcomes. Computational power, AI, Internet of Things, these are transforming every element of the mining value chain. Now, critically, the convergence of these technologies and solutions are allowing us to think differently, to mine differently, to blast more precisely, and most importantly, remove people from harm's way. Exhibit A, the Avatel technology you just saw. Now, we've come a long way from that historic miner on the left, the very manual workflows, to the digital miner on the right, who's rapidly moving towards a future of integrated and automated data flows. What's the size of the prize here? McKinsey estimates that the total industry productivity value from a mega trend in digitization is over $350 billion per year.
Of that, more than $250 billion is around operations and operations management. While initially lagging other industries, the mining industry is now embracing the productivity potential and pursuing automation and data integration to improve the speed and quality of our decision-making. Now, within this mega trend, there is a gap for integrated and end-to-end digital workflows. The mining value chain is fragmented by nature. Now, this is particularly true in and around blasting, and blasting is a critical point of value determination for our customers. I know there are lots of people driving digital technologies across the mining value chain, and I always say, I like our position. Blasting is a great place to leap from, to leverage from.
Now, while integration of this data in this space has progressed, there is no clear champion that's emerged, and this represents a unique opportunity for Orica to provide real-time measurements and insights that can drive quantifiable benefits. James alluded to that earlier in what's changed now. It's our ability to really quantify and demonstrate where we're bringing value from blasting. We've created an animation to show just how Orica is creating the industry's first end-to-end integration. Let's take a look.
Every day, all around the world, the people of Orica help sustainably mobilize the Earth's resources. Resources essential for making the energy, transport and infrastructure, modern electronics, and technologies that billions of people rely on. More than ever before, as global demand increases, our customers need to mine more efficiently, use less energy, meet ESG commitments, and improve safety.
However, disconnected workflows across the value chain have traditionally limited mining's ability to maximize productivity and ore recovery. Orica is providing solutions. Our new customer-led innovation is reshaping the way mining operates by helping our customers move from disconnected to connected workflows. In addition to constantly evolving our world-leading blasting solutions, we now offer our next-generation digital technologies to create efficiencies right across the mining value chain. This whole of value chain approach allows customers to operate more precisely and responsibly and remove people from harm's way, delivering value at each step for our customers. Given our critical role in transforming the rock's composition during blasting, Orica is well positioned to enhance end-to-end efficiencies. Upstream from blasting, we help our customers better understand their ore bodies in real time to drive more informed decisions downstream.
Into the blast design processes, we're integrating complex geotechnical data to ensure the right energy is delivered into the right holes and initiated at the right time to achieve the desired customer outcomes. Downstream from blasting, we focus on post-blast measurement and monitoring to provide insights on blast outcomes and quantify its impact on the processing stage. Orica, in collaboration with its customers, can break down the traditional industry silos by providing digitally connected workflow solutions from mine to mill and close the continuous improvement loop to help maximize productivity, improve visibility of blast outcome.
Mine sustainably and improve safety. By delivering an open, secure, and integrated digital ecosystem across the mining value chain, we help our customers succeed. When our customers are successful, so is Orica.
Now, Orica's digital solutions with its core principles of being open, secure, and integrated, is positioning Orica to become the industry's first end-to-end solutions provider. A journey that started five years ago, our Orica digital business is really anchored in two important physical parts of the value chain. The first is in blasting and the second is in slope stability monitoring. Orica's advantage comes from our global footprint, our physical presence on the bench, where we play a critical role in altering the rock's composition, our domain expertise in blast management, and our leading suite of digital products. Now, additionally, we've acquired and developed measurement capabilities upstream in the ore body knowledge base, and modeling and simulation capability downstream from blasting to ore processing.
In each of these positions, we're monetizing applications of sensors, software, and data science in discrete products, and we're integrating the information generated from each of these workflows to create insights for optimizations and new solutions across other parts of the value chain. The last five years of development and acquisition has resulted in consistent, a consistent cadence of new product introduction that we've rolled out year on year. Look, I'm really proud of what we achieved. Last time I spoke to you, we outlined our strategy for digital solutions. We have delivered on that strategy, and you'll see tomorrow how proud the team is on really putting together what is an unrivaled portfolio of digital solutions and technologies, not just in blasting, but across all of mining services.
The digital ecosystems harness data, scientific knowledge, and domain expertise to fundamentally change the way of working across that chain. The Orica digital environment makes applications and workflows accessible to all the users and enables our customers to build common workspaces for data, models, and interpretations while respecting the proprietary information boundaries. Now I'd like to get into each of the three areas in a little bit more detail, starting with ore body intelligence. Orica's purpose is to sustainably mobilize the earth's resources, and achieving this starts with a better understanding of the ore body at the start of the chain. Miners are now increasing their adoption of technology as they transition towards the concept of a digital mine. They've also recognized the materiality of improving their ore body knowledge throughout the mining life cycle as a key source of value creation.
Now, I started my career 30 years ago as a wireline logging engineer in the oil and gas sector, and I saw firsthand the evolution and the importance of geotech and geoscience information in resource development. Now, while geoscience measurements have long been used in the mining industry, more advanced technologies, often originally emanating from oil and gas, are now being adapted for mining and becoming far more prevalent. As blasting technologies evolve around the world, demand for ore body knowledge also increases. If I make one point that I want to leave you with today in terms of right to play and why we're taking a position in ore body intelligence, I'll repeat it. As blasting technologies evolve, the demand for ore body intelligence increases. We talked about 4D. We talked about WebGen. These are driving new mining methods.
Enabling us to blast with far more precision by distributing energy across the bench. In order to leverage that capability, we need better and more precise knowledge from upstream. Let me talk a little bit about what I mean by ore body intelligence and ore body intelligence capability. First of all, there's the geophysical and the geomechanical measurements. This is like a natural gamma ray measurement or a spectroscopy measurement or an NMR measurement like you'd get in the hospital, but on the rock itself. This is the what. This is the what of any geological model. Then there's the geospatial information. This is the gyroscope information. This is the where in the geospatial model. You need to be able to position those measurements and understand where they are physically in the Earth model.
This is currently a gap in our portfolio. There's the importance of time, when the acquisition and when the processing is done. Typically, a measurement while drilling application will give you a real-time measurement of that data. This is the when. Of course, from an end-to-end workflows perspective, we're interested in the insights that can be generated from this. This is the so what. Now, Orica is uniquely placed to provide critical geoscience information to the industry and to create value downstream by connecting the information to blasting. Today, we're integrating complex geotechnical data into the blast design to ensure that the right energy is delivered in the right space and time to achieve the desired customer outcomes. Moving on to blast design and control.
Blast design and control is where we began our digital solutions journey just over five years ago. Digitizing blasting workflows allows the customers to predict, control, and measure what will and has happened to create a continuous improvement cycle. Moving from manual workflows to digital workflows also provides a really important foundation for automating processes. Everybody thinks automation is about self-driving vehicles, and absolutely, that's part of it. Actually automating what we do, the processes and the loading and the executing of blasting is true automation. You can't automate unless you've got a digital platform of your workflows to build upon. Our blast design offer helps customers to achieve better quality blast outcomes and eliminates excess drilling and explosives consumption.
Our blast control solutions offer full control throughout the blasting process to improve visibility and control of the on-bench operations. Having cemented our position as the market leader in blast design and control software, we've further expanded our offering to include ore dilution and grade control workflow solutions through OREPro 3D. You'll see that all of the regions reference OREPro 3D. This is. We're getting very rapid uptake on this particular product. What's this about? This is about understanding where the rock mass has moved post-blast, and it's critical to separating ore and waste for grade control and downstream processing efficiencies. The ore dilution grade control offer, enabled through OREPro 3D, is the industry's first solution that optimizes ore control in 3D. This is a software model. This doesn't require invasive hardware deployed and sensors to detect blast movement.
Next, by modeling and simulating blast outcomes before they happen, engineers can develop blast designs customized for specific processing requirements downstream. The highly regarded Integration Extraction Simulation, or IES, was developed by the industry consortium CRC ORE. This now resides within Orica following a competitive process to select a commercialization partner. Using IES, our mine-to-mill offering, we now have the industry's first real digital twin with the capability to model from ore body to all the way through to mineral processing. Now to Orica Monitor, in particular GroundProbe. The demand for measurement and monitoring systems that improve safety, productivity, and cost for miners has been growing at pace. Observing this emerging trend, Orica acquired GroundProbe back in 2017. GroundProbe's a global leader in critical geotechnical measurements and ground stability monitoring.
Now, ground stability or slope stability monitoring is important, as unforeseen collapse has the fatal potential to harm personnel, to damage equipment, and to disrupt operations. GroundProbe's radar systems, predictive algorithms, and monitoring software detects wall movement, understands when it might be a problem, and determines when a collapse is likely to occur. Reactive technologies detect, track, and alarm on moving geohazards in real time, giving our customers and communities advanced warning of a breach or collapse. The technology is increasingly being adopted in tailings dams monitoring to support environmental and community expectations around those facilities. With a growing growth in radar volumes expected, we've commenced planning on a second manufacturing site in the northern hemisphere, which will help us, reduce the landed cost of production of these units. For MonitorIQ, I'd now like to talk about our data aggregation platform, MonitorIQ.
Sites are deploying huge amounts of sensors that are gathering different information, including but not limited to just blasting measurements. All sensor information is valued but can be cumbersome to manage individually and are often in a disparate form. MonitorIQ aggregates, automates, and standardizes all of the data collection and visualization. We're also now working to broaden and integrate Orica Monitor's sensors and software suite into our Orica Digital Solutions end-to-end workflows. This will be truly an end-to-end service offering for our customers. Here's a video showcasing GroundProbe's range of products and services. Having presented the elements of our digital strategy and the strategic rationale, I'd like now to turn to our commercial playbook and the strategy for growth. This is really centered around three pillars.
The first pillar is maximizing the core, and this is about exploiting and leveraging Orica's global footprint to engage existing and non-Orica customers. We remain true to the open platform concept, which we started from day one five years ago. We have now many of our Orica Digital Solutions deployed with non-Orica explosives companies. That independence is really important for us, both as a standalone offering in the eyes of our customers, and also to maximize the growth potential of these technologies. Pillar two is about exploring new technology. As we penetrate the market with our current offering, we're also continuing to invest in research and development. We're bringing out new products to the portfolio in underground mining, and quarries and construction markets.
In addition, we'll also be rolling out some new capabilities in the ore body intelligence space, which will leapfrog the existing offering. Thirdly, there's inorganic expansion. While we leverage our in-house software and software sensors and data science, we're also actively in pursuit of targeted technologies and market positions through acquisition to accelerate our digital solutions offering and to create more end-to-end workflow models. I'm really confident about this approach and our success, given our success to date. The graph on the right illustrates the high growth success we've had in the last five years. We've been achieving year-on-year more than 100% growth in customer adoption, and we're now over 275 sites with customers using one or more of our digital solutions products, either as a discrete product or as a connected workflow.
Our business model for this is largely software as a service, as I mentioned earlier, and we have a tiering approach also through a bundled and then, outcome-based contracts. We have a healthy pipeline of customers, and we have great retention metrics. This number continues to grow year-on-year. The Orica Digital Solutions strategy is delivering high growth, high margin products and services and end-to-end workflows across mining and beyond blasting. The Orica Digital Solutions environment is open, secure, and an integrated system providing full flexibility and a common space for collaborative work. It's also now a comprehensive offering extending well up and downstream of blasting, again, as you can see illustrated on this slide. It's an extensive coverage of products, and it's not just in blasting.
Now, given our position as the market leader in blasting, Orica is well positioned to be a leading integrator of these end-to-end digital workflows. Blasting is a critical point of value determination for our customers, which creates a unique opportunity for Orica to provide real-time measurements and insights that can drive quantifiable benefits. This gives us the platform to move beyond blasting. The position combined with innovative and market-winning digital products is behind the success of the overall program to date, and we're just getting started.
When miners can measure the value of their decisions, they can start to close the continuous improvement loop to further drive safety, productivity, and sustainability outcomes. Thank you, and I look forward to hosting many of you tomorrow at the Kurri Kurri site, where you'll get to see, look, touch, and feel this technology for yourselves. Thank you very much. I'll now pass you off to Adam Hall, who's gonna talk about mining chemicals.
I'll do an intro.
You're gonna do the intro. All right.
Thank you. Before we get Adam back on again to talk about chemicals, let's have a quick look at a video that just showcases how the manufacturing of sodium cyanide at Yarwun, our global distribution network and unique products and services, how they come together to deliver value and safety for our customers around the world. It's a significant competitive advantage for Orica. Let's have a look at the video and then we'll get Adam back on to give us an update on chemicals.
Thank you, Angus. So we've saved the best vertical for last with mining chemicals. It's been a much beloved part of the Orica portfolio, but one that we haven't had a chance to talk about in the past. Today, we'll shed a bit of light on it. A small addition to my background from before. Before coming to Orica, I actually spent six years at CF Industries, which is the world's biggest nitrogen manufacturer, which gives me a rich appreciation for ammonia, one of the key feedstocks in cyanide, which we'll be talking about today. But first, why chemicals? We think of it as three reasons. In Orica's portfolio, gold miners are one the largest part.
When we partner with them across the value chain, we're able to bring them obviously the ore body intelligence and the blasting. We can also bring them the refining, and that's what we do with the cyanide. That presence across the value chain helps us be the partner to clients, gold mining clients around the world. Why can we do that? We can do that because we're already present everywhere the gold miners are. We're used to bringing difficult commodities, AN and detonators, to their locations on a reliable basis. By adding cyanide to the mix, it's another way of helping to understand and fulfill their needs. Finally, we have a series of complementary components to these solutions offerings.
When we sell cyanide, it's not as a commodity product. It's not selling a FOB port, and that's the end of the story. Rather, it usually comes with a safety training or our product suite, which we call PRO Service, which has software and sensors to measure the cyanide presence in the cyanide circuit, as well as the performance of that circuit for the client. Even with emulsifiers, we'll sometimes tailor our emulsifiers to a particular country or even to a particular mine site, in order to better serve the client for the solution that they need. It's a very exciting part, but maybe the question is how big is the prize?
On the next page you can see, not just cyanide and emulsifiers, but the rest of the mining specialty chemical market as well. Starting with cyanide, this is obviously our biggest product today. It's a comparably big market. You know, as you're probably familiar with, it's a leaching agent that you apply to refine or to get gold. But in addition, emulsifiers. Emulsifiers, a small but mighty part of our product suite. A profitable part that allows us to really differentiate our explosives, and I'll take you through that in just a few moments. I'll spend just a few moments now on the rest of the growth opportunities.
Those first three bars, collectors, frothers, flocculants, they come together in a flotation circuit, and many mines run on that basis and use all three in order to get their ore into metals for market. In addition, there's solvent extractants, and that's an alternative pathway outside of the flotation circuit that customers can use. We see all of these as potentially interesting for Orica. These are all big fields. There's different chemicals and by commodity that apply in each. Each of them has something that we potentially could partner or bring to our clients, and something that we'll be looking to across the course of the next, you know, five years or so. As I've mentioned, cyanide is our single largest product.
You might wanna understand a little bit more about the drivers in cyanide. If we go to the next page, you can see the cyanide demand and supply. Starting on the far left-hand side, gold production, you can see it's written down there, at a modest 1.6% growth rate. This is not too conservative, but neither is it the inflationary gold bull case that sometimes gets put forward. We've put forward a sort of 1.6% that seems very reasonable to us across the course of the next five years. What's interesting is that 1.6% translates into 4% in terms of global cyanide demand.
That's because although ore grades should hold, each year the ores get more complex. Each year, there's more sulfides and coppers in the ore system. Those sulfides and coppers, you need to use more cyanide to extract it. Similarly, often, as the ores get harder, you grind them more. As you grind those ores, you get those finer grains of ore that pass into the circuit. That means more surface area, which means in turn more cyanide. We see cyanide again with some pretty moderate assumptions growing at a multiple of the global gold ore demand, which we're pretty excited by. Now, on the other side, you can see the supply side, and in general, cyanide supply side response is pretty slow.
The global industry utilization is already at about 90% and, you know, new developments are hard. You know, for a greenfield project, there's significant regulatory challenges. Now, I personally would love to have the industrial poetry of Yarwun in my backyard. It's a beautiful plant, and you'll see it in a moment. But that's not a universally held belief. If people do not want a cyanide plant in their backyard, that tends to restrict where you can construct them. One of our major competitors very publicly identified a location, bought the kit, was unable to deploy it for five years, because the local community did not see the aesthetics of that plant.
In addition, there's a multi-year construction time for brownfield, and brownfield is more complex, I think, for cyanide because of the challenges in safety. You of course don't want any leaks in that brownfield process. The other thing probably to draw your attention, there's a comparably small number of technology providers. There's certainly less than five, and each of those technology providers is also a player in the industry. So over time, that will tend also to you know minimize the number of facilities. As a result, there's a pretty strong correlation between cyanide price and industry utilization. Why is that? Almost all cyanide producers sell to clients on a formula, and the formula is the two major feedstocks.
The publicly observable index for ammonia, a price index for ammonia multiplied by a usage factor. The publicly observable price for caustic multiplied by a usage factor plus an adder. You're passing through those fluctuating raw material costs to the client, and that adder represents effectively a payment for the use of your capital, as well as to cover the fixed costs in the plant. With that formula-based pricing as well as this S&D construction, it suggests a comparably supportive price environment going forward. With cyanide being low single digits of a gold miner's spend each year, it's not something that will tend to change the demand profile.
I'm not gonna say that the price is unresponsive, but excuse me, demand is unresponsive to price, but I'd say that it's just not the most important thing for miners to focus on. They'd really rather be driving that productivity and getting as much gold out of their facility as possible. That's the background on the market. What about Orica? One of the fascinating things about Orica is this Yarwun plant, as I mentioned. It is, it's in the top five plants in the world, but it's also the most export-oriented. Many other plants are devoted to nearby gold mines. In many of the big gold mining regions in the world, if there's a cyanide facility, it's really oriented to serving just that facility.
Yarwun exports a majority of its output, and we do that using that Orica network around the world. The fabulous relationship that we have with miners everywhere enables us to talk to them about cyanide and then bring that Yarwun cyanide to bear. Freight, a comparatively small cost, for a small part of the overall cost base and they would face a similar freight cost from any other providers. That doesn't inhibit us from selling Queensland tons almost anywhere in the world. The other thing that of course helps us is our wonderful sparge network. You can see them on the page there, going from right to left, Malaysia, Ghana, and Peru.
Each of those allow us to receive the solid briquettes from Yarwun, load them into a reinforced tank, and then ship that as a tank to the clients who then run liquid through it in order to get a wonderful solution that goes straight into their circuit. It protects the environment in transit, it protects the humans at destination, and we've got about 25% of our volume in sparge, and customers love it. The other thing to point out here is this operational leverage. Because we have this global position, because we have this wonderful access to miners around the world, we tend to understand what's going on in the market a bit more.
That gives us, we're able to construct better supply chains, better freight management, including charter vessels as needed, and able to have that global network of experts being able to help the clients. You can see where that all comes together at the bottom there. We serve customers with liquid cyanide that's really just nearby Yarwun because it's a sort of short-haul product with briquettes and as I mentioned, with sparge. Each of those is usually accompanied by services. A client will want a process health check or training for their staff or an analysis of their circuit performance as part of the engagement with Orica. We're delighted to provide that.
We think this is a hazardous good, and we want it to be treated carefully around the world. What are the opportunities from here? You know, there's risks and opportunities. The risks probably comparatively intuitive. If there was to be a slump in gold demand, that would obviously have a sharp impact on cyanide. Likewise, acrylonitrile. Acrylonitrile is a chemical used in fabrics, traditionally auto fabrics. The by-product of acrylonitrile is hydrogen cyanide. That hydrogen cyanide molecule, you can do several things with, and the most popular is to turn it into MMA, which is another popular molecule. There are some plants that manufacture sodium cyanide as a by-product. That sodium cyanide, as a supply base, is price indifferent.
They're gonna make that sodium cyanide as long as the acrylonitrile is running rather than depending on the sodium cyanide price. If acrylonitrile was to take off, we don't believe it will, but if acrylonitrile was to accelerate further from where it is today, that would obviously have an impact on cyanide price. Substitution. Cyanide attracts a number of substitution discussions, but it's rarely commercialized. There's one major mine that has switched away from using cyanide into a different reagent, that cost them north of $100 million, and our understanding is that they would not necessarily do that again. That particular mine site also had a lithology that lent itself to this alternate reagent.
Even with everything going for the alternative, it was still a mixed bag in terms of switching away from cyanide. Substitution absolutely has a potential, but, you know, it's been talked about frequently and never come to pass. In terms of the opportunities, let me start with sparge growth. You know, I'd like to think that because we have constructed, operated, served clients from these wonderful sparge stations around the world, we've got the right to grow, and we continue to talk to gold miners in new locations about constructing sparge stations to serve them. I could see that as being a comparatively low capital investment in order to drive our network growth. The next step up in terms of capital discipline would be a plant expansion.
You know, Yarwun has terrific opportunities around brownfield. It's something that we continually look at. We grew it recently by about 9%. We'll be looking at that again and looking again for high single-digit, low double-digit growth in capacity there as well. Inorganic. From time to time, cyanide producers come to market. It's something that we take a very careful look at when it happens. Again, a disciplined approach to opportunities there. If we go on, this is cyanide, but what about emulsifiers, that small but highly profitable part of our portfolio? Let me start on the left-hand side of the page with just what emulsifiers are.
They're the special dispersion and stabilizing element in an emulsion. The emulsifier combines the AN, the fuel oil, the water in a way that helps them all harmonize and be consistent in the deployment at the client site. The way you make an emulsifier is you buy PIB, which is polyisobutylene, and then you transform it into PIBSA after combining it with maleic anhydride. That, again, with some amines and some other oils allows you to produce that emulsifier. Many people actually don't buy the PIB. They buy the PIBSA, which is a comparatively small market in order to make their emulsifier.
I think part of Orica's unique position is having that vertical integration, purchasing PIB, making the PIBSA, and then driving that into an emulsifier. What do you use it for? On the right-hand side of the page, you can see how the emulsifier is often the secret sauce in an emulsion for many miners. It helps you with stability, helps you with viscosity, helps you with uphole retention, all of which are absolutely critical to success at the client site. Our customers are all explosive service providers. We'll sometimes sell to industrial customers as well, but not as a priority. The emulsifiers need to be tested and qualified. There's a long sell-in process, but once you've achieved it, those customers are sticky.
They wanna stay with you because they've qualified that substance. They wanna use it and keep their operations running. The competition, some other explosive players, make their own emulsifiers. However, as I've just mentioned, they're not generally back integrated to PIB. They usually buy PIBSA, and that gives them a cost disadvantage. Or they're global lubricant manufacturers who are delighted to make these but have no knowledge of miners' needs and no attention paid to the sorts of characteristics that are needed from the product. That's the chemical, but what's our role? We're very fortunate to have two wonderful plants. In North America, we have a long-term partnership with a group called Nelson Brothers.
As part of that partnership, we have a 50/50 ownership of a terrific emulsifier plant in Parrish, Alabama. It's logistically advantaged. It can serve all of North America and can serve South America as well with overflow capacity. Being in North America, its PIB supply is back to Henry Hub, so it's got a great cost advantage, great cost position there. It's something that they've got a team of scientists on site continuing to develop features around this product, that's just a wonderful opportunity for us. Turning to Deer Park, you might be surprised by this. It's a cost-advantaged plant in Melbourne. The reason for that, again, it's actually got scale.
It's one of the biggest mining-focused emulsifier plants in the world, and it has access to the Asian PIB market. There is a live market for PIB in Asia. As a result, Orica are able to buy at really competitive rates, bring it into Melbourne, transform it in a scale facility into a great product, and then ship it across the world. You can see all the places globally that we ship to there. You know, again, comparatively small volumes, but a really interesting chemical for Orica. What's next? On this last page, you can see our opportunities to grow. Again, going from left to right in terms of capital deployment, first adjacencies.
There's real opportunity for us to expand the emulsifier chemistry, look at alternative cyanide delivery models or cyanide services and really grow in that way or alternately use our existing logistics assets in order to handle other chemicals as well. That's sort of the first step in the journey and something that we're excited by. The next is partnerships, and this is where, you know, if there's a byproduct or a comparatively small value stream coming out of an integrated facility that can be used to serve miners, some of the other big chemical players have approached us to potentially partner with them to handle that chemistry.
You could see the partnership there ranging from Orica acting as an agent all the way through to an offtake agreement, all the way through to Orica purchasing the byproduct production unit at a particular integrated facility. That's pretty exciting. Again, our value that we would bring there is this deep understanding of what the miner needs and how we can deliver that using the products that are produced. Finally, inorganic growth and adding extraction chemicals to our capabilities. Probably the best way to think about this is in the hands of a large chemical manufacturer, the mining slice of their portfolio, comparably small, comparably uninteresting, uncorrelated with the rest of their output.
They don't invest the time, they don't invest the bandwidth in understanding the needs and driving value in that business. However, in Orica's hands, we absolutely wanna drive that business, and we want to use our global footprint, our relationships to maximize the value of that business. We could do that also at a bolt-on level as well. We see many opportunities to grow, ranging from capital light to more intense. We'll be frankly developing all of them and bring them to market as we see those value-creating opportunities. For now, let me hand over to, I think it's Delphine to take questions. I look forward to your thoughts.
Thanks, Adam, for that very energized presentation. Thank you. We'll take questions now for the digital solutions, and Adam, if you can just wait on the line for chemicals too. Let's start with questions from the room. Please put your hands up high so we can get the microphone to you as quickly as possible. We've got one here from the left.
Thanks. Richard Johnson from Jefferies. I've got two questions on cyanide, if I may. The first is, Adam, there's been significant structural change in this market with Cyanco making acquisitions in the U.S. and South Africa and here in Australia. I was just wondering if you could make a comment on your thoughts around that and what your thinking is, around what that could do to, you know, general returns in that market with the supply side consolidating the way that it is. Does that mean that you've kind of missed out on the inorganic growth in cyanide? Secondly, there's been, you know, significant cost pressures in Europe, and there've been reports of production curtailments of cyanide in Europe. I just wanted to find out whether that's still going on as far as you know and the impact that's having. Thanks.
Thank you very much. Great questions. Let me start with the second. The European energy costs sky-high, a challenge for many producers. The most the sort of couple of what you might call Old World European producers are, as we understand it, use some output to mining but also some output to industrial chemistry and ag chemistry. As a result, even with the higher energy prices, even with those plants either running slow or coming down, the impact on the mining side has not been as large. Those two plants also not the largest in the world that are coming off. I would say a slight impact.
If you look at a sort of global map where we might intersect with them, you would look to the Middle Eastern sort of region. In that Middle Eastern region, we have seen sort of less presence from them, but I wouldn't describe it as a tectonic shift in sort of the global S&D at this stage. Let me turn back to your other question. You were asking about one particular competitor, and several moves that were made, that they've announced. I'm gonna say in general, I think that Orica's reluctant to become a tenant on a landlord site. I'm thinking of South Africa there.
That's a difficult position to be in, to not control your own destiny, particularly if it's a different chemical process than one we're used to. In terms of the United States, you know, the US is a very big market. Or excuse me, I should say North America. North America, a very big market. Mexico, the largest sort of cyanide market in the world. Plenty of opportunities for many others to participate there. The theme of consolidation, though, I think is fair. I think that but I think we're sort of probably at the early stages of that in global cyanide, so I think plenty more chapters to come. Delphine, Sanjeev, you may have additions to that.
No, I mean, Adam. Look, Richard, we've been very, very disciplined in terms of where we invest capital, and we'll continue to be disciplined. We are one of the pioneers in this industry. We understand the technology. We understand the strengths and weaknesses of what's out there. Core dependencies are very, very important in this business. The fact that we have a fully integrated site where we produce this particular hazardous and very difficult-to-handle chemical gives us unique insights into what the rest of the industry does. We'll obviously leverage that. Whenever there's a discussion of consolidation in industry, Orica will always have a seat at the table.
Orica is also happy to walk away where we see challenges, whether these are environment related, sustainability related or in general in terms of market outlook and dynamics. Now, the mining chemicals market is much bigger than cyanide, as we have tried to elaborate today. There are so many fantastic opportunities out there, given that it's kind of a core business, a side business that's operated. We have a lot of opportunities, and we need to be very careful and focused as to what we really want within the portfolio in terms of our offering and where we see potential for future growth. We'll continue to explore. We'll be extremely disciplined, given the operational experience and background we have in that business.
Thanks, Sanjeev. We've got a question. Scott?
Hi. Thank you. Scott Ryall from Rimor again. Angus, this may be hopefully a quick one for you. Could you comment in terms of the customer base that you're looking at implementing these solutions, what is their digital capability to be able to utilize your solutions? How far along the path are they? You know, and I guess what I'm after is if you could just give a rough percentage penetration of customers that are digital-ready enough to utilize your services and maybe by geography, if that's an easy thing to do.
Look, the short answer is it's a really broad range, as you would expect. Some of our customers are really quite sophisticated. I think it works two ways really. One is there's an opportunity where there's a fairly low level of sophistication to provide digital support through the Orica offering. Where we are working with sophisticated customers, we're able to integrate quite effectively. I'm not gonna give you a percentage because I, you know, it's evolving and growing very quickly. What I will say is we took a decision last year to align a strategic partnership with Microsoft around our digital solutions business. That was quite a deliberate strategy to work with Microsoft on a common data platform.
This gives us really a far more seamless integration with customers, regardless of their level of sophistication on the digital side and readiness. Obviously, also takes, manage some of the, you know, the security concerns and, you know, whenever you engage with any partner on digital technologies and use of data, the question around cyber and security comes into play. We view that partnership as quite important, to allow that ease of integration in the industry.
Andrew?
Thanks. Andrew Scott, Morgan Stanley. Sanjeev, just a question for you. We've heard a lot about technology in these forums over a number of years. To be frank, we've probably never seen it really evident in the earnings. Rightly or wrongly, there's been a view that maybe this was loss leading to win the next contract, or maybe it helped win share. How do you and how should we judge this business, whether it be from a return hurdle or profitability hurdle? And how will we actually see that come up in the numbers?
You're right. Technology offerings from Orica were sometimes the cherry on the cake, and in a lot of cases were given away in the past. When I came in last April, I talked about a dedicated techno commercial team who runs a P&L responsibility to commercialize and scale up technology that sits with Angus. So he runs a P&L. Angus, you want to talk about your technology commercialization team and how they are operating today?
Yeah. I think it's a great question, and it's a question we field a lot. I think, you know, the thing in mining is that it's a long life cycle of technologies which accounts for slow in and also slow out. I mean, if you look at electronic blasting systems, it's in its 20th year now. That introduction phase, you know, taking things from the lab to a commercial application is difficult in any industry. It's particularly difficult, I think, in mining. Remote locations, the scale of things and operations to be able to integrate, and there's a lot of change management. As Sanjeev alluded to, we stood up last year a dedicated commercialization group.
This takes the technology from the lab space and works with the regions, works with customers, and we've resourced that to be able to bridge that void. I think in terms of going forward, you know, this question of scale and that we're at a really important junction now where we're starting to deliver scale on WebGen, delivering scale on 4D, and particularly the digital technologies which have come very quickly. Scaling quickly from little things, big things grow. It is very high margin, it's very high growth, and we hope to be in a position next year to be giving you better line of sight on the digital solutions suite of products.
To put it brutally today, each service that Angus' team develops in the labs and with the coders and brings to the market has an independent SKU in the 4S system. There is no capability of the very smart commercial people we have to give it away. There's a price tag to it. Each product and each service that we have is hardwired into the 4S system, and it cannot be given away even if they want to. If they would like to give something away for free, they have to come to Angus or Chris Davis or myself for approval. You can imagine how many such requests we receive in a year. I don't remember the last one I got to give anything away for free.
The other data point is that, and I think Angus talked about it, we have digital services operating on sites where we do not do blasting. Somebody else does it. They use our digital platforms. Those products are appreciated. They have fantastic value. There is no intention to give it away for free at all.
Right.
Just on that point, Sanjeev, BlastIQ in India, you know, has been a digital-first offering for us, for a number of clients.
I'll just take a couple of questions from the line. There are four there. I think we've answered three about monetizing technology and the client's adoption. I think there's one here for you, Angus. It says there are still large independent GMP software suppliers in the market.
Yeah.
What are the primary benefits of acquiring versus partnering with them?
Yeah, that's a great question, actually, one that we actually bat around quite a bit. That software market in the mining space is actually quite fragmented. I mean, it started almost as a cottage industry with, you know, niche applications. It's consolidating, but it's still quite fragmented. I think we would certainly be open to partnerships as well as acquisition. I think certainly, valuations have been quite high, and that's come off the boil a little bit of late, which makes the space a bit more attractive, but we wouldn't rule out partnership. It's an important space, particularly, the planning and scheduling portion of that software business.
You know, we talked about quantifiable benefits and, you know, having the capability to do better blasting or having the capability to do things, having generated insights, needs to translate to action. Obviously we're masters of our own destinies when it comes to things like blasting. The ability to deploy through, say, planning and scheduling also helps monetize, you know, the value of the information or the better blasting. It's an important space for us to be engaged with, and we would certainly be willing to look at partnerships as well as acquisition.
Can I just add one more to that's just popped up? How do you compare to your peers on the tech platform and solutions?
Well, I can only talk to what Orica does and, you know, I think you've seen from the prior investor show and the one here that we've been quite committed to this strategy for some years. We've committed through the investment cycle. I think we have an unrivaled position, not just in and around blasting, but now also integrating upstream and downstream of that. I'm very comfortable in our position, and we're doing what market leaders do, which is lead. I'm looking forward, not back.
Thanks, Angus. Any more from the room? There's one more online for Adam. When will these new mining chemical sectors start delivering double-digit million EBIT?
Oh, okay. Maybe two pieces there. The chemicals that I outlined today, cyanide and emulsifiers, are a very healthy part of Orica's overall EBIT. A very meaningful contribution to our performance, and it's part of the reason we're so thrilled to be talking about them a bit more today. If there was to be a in terms of new chemicals and new avenues, my guess is a meaningful change there would be marked by capital deployment, which in turn would be, you know, an announceable event. You know, stay tuned on that front. Partnerships, I would regard those as incremental on the side, to as we learn more about this industry and develop more. Delphine, do you think I interpreted the question there correctly in what I addressed?
I think you're fine.
Maybe the one thing to just emphasize, the one thing that we're thrilled about chemicals in the Orica portfolio is the quality. It's a sticky business. Once you win one of these customers, we tend to work with them for a very long time. They love working with us. We love working with them. The margin is generally, as I said, you pass through the raw material cost, and then there's an adder for the contribution from your capital. It's something that we're happy to do.
Thanks, Adam. Are there any other questions from the floor? We've got one at the back. Thank you.
Nathan Riley from UBS. Angus, I'm just curious, just in terms of the realities of cost inflation in the mining market at the moment, you know, how does that impact your growth aspirations, your conversations with customers or adoption rates? I mean, clearly you've got a solution that offers an efficiency benefit but also an energy cost or reduction benefit as well. But I'm just curious how that conversation, you know, is taking place in an environment where cost inflation is such a significant issue for your customers.
I'll deal with it in two parts. I think first of all, on the digital solution side, this is software, sensors, data science. Particularly from a software and a data science perspective, we are less prone obviously to some of the inflationary issues in hardware and also some of the logistics challenges, which is also driving that inflationary cycle. We saw that through COVID. There was a lot of COVID disruptions to technology introduction programs, and we were able actually to continue to ramp and scale quite quickly on the digital products because it was more easily moved. I'm not overly concerned about the inflation side on the digital technologies. I think perhaps on the people and capability side, that's some more pressure there.
There's a real fight for talent, obviously, in the tech space, and we're no different from that. We are able to attract, you know, great talent, because of the progress that we've made. I think on the hardware side, it's you know very similar to the challenges we have across all of our products. It's about making sure that we have the right commercial discipline and that we have the right commercial instruments in place to be able to pass through those inflationary costs.
Thanks, Angus.
Just one more.
One more. I think this will be the last one for the session.
Sorry. It was more a question in relation to how the cost inflation of your customers is impacting the demand for your services and the outlook for your growth aspirations.
Yeah. At this stage, I'm from a technology perspective not seeing any dampening in demand for those products. In fact, where we can help, you know, create efficiencies and drive more efficiencies, then there'll be a stronger pull.
Okay. Thank you. Thank you all. Thank you, Adam. Thank you, Angus. I'll call Leah Barlow to give you an update on supply and manufacturing.
Just, give me a second. My voice is not doing well today.
Yeah.
Good morning, everyone. It's an absolute pleasure to be here today with you all. My name is Leah Barlow, and I was appointed to the role of President of SHES, Discrete Manufacturing and Supply this year. I've been with Orica for over 17 years in numerous manufacturing roles. I actually started at Orica as a graduate, and I've worked in both the continuous manufacturing, the fabulous cyanide plant that Adam alludes to. I worked a number of years there, and also in our AN and discrete manufacturing fields, across more than 20 countries globally. Prior to my current role, I've just moved back from Montreal, Canada, back to Melbourne, and I've got global responsibility over our discrete manufacturing network, and I'm also responsible for the strategic implementation of the network optimization program and also the SKU rationalization. Thanks, Delphine.
It's been well documented, the supply chain challenges that we have. This is not new. What does this impact mean for Orica? Well, actually, this actually represents a unique opportunity. We have a wonderful portfolio of plants and network to make sure that we assure security of supply to this organization. This includes activities like strategic ship chartering with accelerated local electronic blasting systems, assembly local to the customer, and also leveraging our AN partnerships that we've had and supply network in order to introduce new capacity into the market and support the quality of earnings at each regions. Just a bit of a quick snapshot of our supply chain. Orica has access to over 3.9 million tons of AN globally through our preferred supplier partnerships and also our five continuous manufacturing facilities globally.
Orica has increased its internal manufacturing capability of electronic blasting systems to over 18 million units, and we've got projects in place to implement further growth over the next two years. Most importantly, and I think often undervalued, is that we have established import and export capability to over 75 countries, which has allowed us really that flexibility to make sure we don't disappoint customers. I'm extremely proud of our team. It's been difficult. Our teams work 24/7 to make sure that we never let a customer down in these trying times, and it's really this reliability that allows our commercial teams to demand value from our customers. Next slide. This is a map of our network, and if you talk to me in the break, you'll know that I'm very passionate about lean manufacturing.
This is a network that's continually optimized based on lean principles. We continue to optimize this network to operate, and it's actually operating on a hub and spoke model. This is done to reduce our lead times, allow lowest cost in delivery, and reduce interregional transport. Our global manufacturing centers in each region, combined with our strategic distribution center locations, which you'll see in the blue dots on the screen there, actually, which are close to our customers, allow us to manage our supply chain in the most effective and efficient manner. This is coupled with our backup sources and supply and offers unparalleled reliability and our security of supply. Next slide, please. Now to AN and our continuous assets, and I must emphasize this. Reliability and flexibility of these continuous assets is absolutely key to delivering on our strategy. I'll start firstly with flexibility.
We talk a lot about where we got our AN from. For me, when we look at our AN, we need to look at our network. We've been able to capitalize on our network by unlocking what I would say our AN facilities, our domestic and our export capabilities. We've talked about that. Germán's talked about that in regards to improving switching from Nitropril to AN prill so we can send that to more melt facilities. We've also done that by increasing our bagging capabilities on site to ensure that we're always maxing out the capacity of our plants. Further to that flexibility, we're also pursuing to invest in a new 30,000 ton ammonia tank in Kooragang Island to optimize our ammonia network on cost on the East Coast and to deliver improved reliability and supply security.
This is also a key enabler for potential green ammonia value chain at KI. Chris will talk more in detail regarding sustainability actions we are implementing on our AN facilities to decarbonize our continuous plants and make sure they're future-proofing our assets. The other area is about reliability. Orica's investment and focus on improving maintenance and turnaround execution has reduced unplanned downtime over the last few years. Our teams have been investing in really improving our capability to deliver turnarounds on time and on budget in very trying circumstances. The key to this is really around optimizing our turnaround cycles. What does that mean? That means making sure that we understand what are the drivers for the turnaround and making sure that we do what is minimally required to assure license to operate, but also, make sure that we sustain reliability for the future.
The other key area is around maintenance execution. An example of this is four out of the five last turnarounds were delivered within plan, with the exception of Carseland, that had some delays to the schedule due to startup issues with the expander. These will actually be addressed later this year. As Nutrien go into a shutdown, we're gonna take advantage of that to rectify those issues and work together. The other part of the business around discrete manufacturing and we are well advanced on implementing our discrete network optimization strategy at Orica. The fact that this program was well advanced prior to the pandemic-induced supply chain issues has actually allowed us to efficiently assure security of supply to our customers where others haven't.
Some of the critical milestones, and I've mentioned it before, is accelerating our capacity increase of electronic blasting systems. Primarily, we've done that in Latin America, and we have plans to move into several other regions in the next year. We've done that by really looking at efficient hub and spoke models where we can pick up that technology and move that to remote locations to make sure we're close to the customer and be very agile. The other part of it is the implementation of the SKU rationalization program. This has enabled us to have increased utilization of discrete manufacturing assets in our network. We've reduced our SKUs by 40% in the last two years by transitioning customers to premium products and optimizing our product families.
The other critical enabler to our optimization strategy is the development of Lurín in Peru and Gomia in India as our global discrete manufacturing hubs. Lurín manufacturing site, which was part of the Exsa acquisition, and for people that have been in these processes for a while, the Lurín technology is the best discrete manufacturing technology I've seen, and I've been in this industry for a long time. It is about how can we leverage that by introducing the full suite of bulk emulsion, packaged emulsion, and discrete manufacturing products, which we've done. Lurín can now make the same quality of and standardization range that we've got in all our other customers or, sorry, all of our other manufacturing facilities worldwide. The other aspect is we've enhanced our product quality, and we've also enhanced the efficiency of that area to continue to improve its utilization.
I've just recently got back from Peru a few weeks ago, and the site's been doing extremely well in making sure that we've got the right people and the capability to deliver on our promise. The other area is Gomia in India, and we've just introduced the standardized Orica timing range, and we're now exporting our detonators into EMEA, Asia, and AusPAC from that plant. Excuse me for a second. As Sanjeev mentioned earlier, Orica's competitive advantage as the market leader is about making sure we leverage our scale, scope, and reach. A few examples of that is leveraging the new SAP system. We've been able to do that.
We can now see all of our processes and products and manufacturing distribution centers worldwide, and we've done that to make sure that we're optimizing our delivery on time and on full to our customers, but we're also optimizing our efficiencies. Other examples of that is the global freight network. Adam mentioned that about the opportunity for mining chemicals and cyanide. We've actually brought in time charters to be able to export cyanide out of the Yarwun site, maximize that utilization, and also bring that across to numerous countries worldwide. The other piece is around partnership and leveraging our scale. We've been able to strategically partner with AN suppliers as well as discrete manufacturing suppliers worldwide, and that strong partnership has been able to overcome some of these supply challenges.
A good example of that is that we had issues with the resin suppliers out of Texas and we had a shortage of resins for 12 months and that is a key product into our conventional IS. We've been able by second resourcing, applying and flexible manufacturing technology to weather that change and make sure that we don't disappoint our customers. Lastly, not least, we're actively working out with our suppliers to help them manage their scope one and two emissions, which in turn help manage our scope three emissions. We've done a lot of work to really baseline and work with them to improve and make sure that we're not just looking about the here and now, and we're securing our future in supply chain and manufacturing. How will we measure success?
I'll try to be as exciting as Adam, but really it comes down to safety and reliability. That is how we measure success in manufacturing and supply chain. Also by ensuring we have high plan availability, supply reliability, and that is our competitive advantage. As I said, I'm passionate about lean. It's all about continuous improvement. I'm never satisfied with where we are. We need to improve, and that is around optimizing and growing our manufacturing network globally to support our customers and making sure we're agile and we listen, and we can make sure that we never disappoint. Thank you very much.
Thank you, Leah. Before Chris joins us, we just wanted to talk about sustainability. We'd like to share a final video which summarizes one of our key sustainability initiatives at Kooragang Island. Leah just mentioned that. Having already successfully installed the technology at our Carseland manufacturing plant earlier this year, we've now partnered with the government to reduce KI's greenhouse gas emissions by installing an Australian industry-first tertiary catalyst abatement technology, and that'll be happening towards the end of this year. The technology is designed to deliver up to 95% abatement efficiency. It'll help us accelerate our progress towards achieving our 2030 emissions reduction target and our net zero ambition by 2050. Chris, over to you on sustainability.
Thank you, Delphine, and good afternoon to everyone. I'd like to start the sustainability session by turning to slide 85, entitled Sustainability Strategy. It is fair to say that over the past three years, Orica's commitment to putting in place sustainable business plans and practices has gone from an emerging priority to be at the very center of everything that we do. This has been less in response to external expectations, but more a growing awareness within Orica as to, firstly, the central role sustainability plays in our purpose, namely to sustainably mobilize the Earth's resources. Secondly, the critical responsibility we have in decarbonizing the mining supply chain in partnership with our customers. Additionally, the long-term and value-creating opportunities presented by a decarbonizing economy.
Given our footprint across more than 100 markets, the tangible role we can play in addressing community concerns on issues like anti-slavery, minimizing environmental impacts, and respecting human rights. The consideration of sustainable business strategies and actions is ever present across both our board and management agendas. We are also broadening the discussions to third parties and governments, and exploring critical collaborations to ensure we meet our objectives in this regard. Today, I want to share with you some insights into our approach and thinking, and provide an update on a number of initiatives already underway that demonstrates Orica's commitment to sustainably mobilizing the Earth's resources. If we turn our attention to slide 86, entitled Sustainability Leadership.
As you would expect, our unwavering commitment to the safety of our people and communities remains our highest priority and sets a high standard across the business for the management of Orica's other material sustainability risks. To this end, we have established an internal sustainability and climate change committee to further encourage cross-functional collaboration on emission reduction initiatives across the business. This forum shapes the planning, resourcing, and capital allocation needed to deliver on our sustainability commitments. It will also continue to drive a management mindset across the business that applies a sustainability lens to every material decision that we make. We have also extended the criteria for executive remuneration to include key sustainability metrics covering emissions reduction and diversity. Alongside the targets disclosed in the Orica annual sustainability scorecard, these priorities are then cascaded down into the business.
In doing so, we are sending a strong message from our leadership to our people on what our focus must be, what our expectations are, and where accountability sits. We have also placed a high value on transparency with our external stakeholders. Our commitment to aligning with the reporting demands of the Task Force on Climate-related Financial Disclosures is unchanged, and both the Orica board and management team have been working towards meeting its criteria for several years, including our first integrated reporting suite in last year's annual report. By so doing, our external stakeholders can continue to assess our progress and provide feedback on our actions and priorities and performance. It is pleasing to see that our work is being recognized and in turn, we believe our investments in sustainability are emerging as significant engagement points with our people, our customers, who see Orica as leading in this area.
Importantly for us, this is just the beginning, so watch this space. Moving on to slide 87, entitled Sustainably Mobilizing the Earth's Resources. As you would expect, given our status as a heavy emitting global manufacturer, our approach to decarbonization places a strong focus on reducing our Scope 1, Scope 2, and Scope 3 emissions. This commitment is shared across the mining sector, and we believe Orica is well-placed to play its part in reducing its footprint and that of our major customers. Our climate strategy is underpinned by four key pillars. The first pillar is planning for a transition and acting and investing in anticipation thereof. As Sanjeev has already mentioned, as part of his strategy rollout, we are doing this by increasing our focus to future facing commodities. That is not all.
We are confirming our place in the green hydrogen economy through our partnership with Origin Energy at Kooragang Island site to finalize a feasibility study into the commercial production of green hydrogen and ammonia, which I will talk about shortly. Our second pillar of accelerating decarbonization focuses on the investments we are making toward meeting our public targets and ambitions to reduce emissions by at least 40% by 2030 and to be net zero by 2050. In this respect, we are reducing our direct emissions from the manufacturing of our core product portfolio. We have already installed tertiary abatement at Carseland and will commence installation at Kooragang Island toward the latter part of this calendar year. The embedment of climate actions into our strategic decision-making will ensure we are successful.
This means relentlessly integrating our climate risks and opportunities into our analysis, governance, planning, capital allocation, and strategy development and execution. Finally, our actions must align with the commitments of the broader supply chain and communities. The emerging interest of our major customers in our emission reduction initiatives is particularly exciting and is featuring more and more in our commercial discussions and tendering processes. If we look at slide 88, it shows our journey towards our net zero ambition. As an organization of engineers, setting our 2030 target and 2050 net zero ambition was not an easy one. We did not want it to just be a statement left to the next generation of leaders to address.
In this respect, we analyzed and outlined a credible evidence-based pathway to achieve these targets, which were signed off by both the executive committee and the board, so as to provide confidence to our investors, partners, and staff that we will successfully transition the business to meet the demands of a growing decarbonized global economy. As is evidenced on the slide, our focus over the remaining years of the current decade will be on reducing direct emissions from our nitric acid plants, securing renewable power agreements to our major manufacturing sites, driving production efficiencies, and with partners such as Origin, scaling up the volume of greener feedstock for our ammonia plants. Over the longer term, achieving net zero will see Orica purchasing from lower carbon suppliers.
In this respect, I'm pleased to report that our inventory analysis of our Scope 3 emissions shows that our material ammonia and ammonium nitrate suppliers are already covered by similar emission reduction commitments. Then finally, we will purchase a small volume of credible residual offsets. What exactly are we doing today? If we turn to slide 89, I'll provide a little more detail on a couple of tangible examples of how we are following on our commitments with action and investment. Orica's global portfolio of nitric acid plants emit nitrous oxides, a particularly concentrated greenhouse gas, as a chemical by-product of converting ammonia into ammonium nitrate. By putting in place what is referred to as tertiary abatement on these plants, which achieves in excess of 90% emissions reduction, we can reduce our total Scope 1 and 2 emissions by approximately 30%.
This technology is proven, but it is capital-intensive. Under normal investment disciplines, the business case for deploying the technology would be challenged. However, we are pleased that we've been able to collaboratively partner with the provincial government in Alberta, Canada, and the New South Wales government at Kooragang Island to progress with these important installations through co-funding and the generation of carbon credits. The net result is that the Carseland plant now has the tertiary abatements in place and is fully operational and performing above expectations. The equipment for Kooragang Island is already in transit and scheduled for deployment later this calendar year. Similar investments at our Yarwun facility are now under final consideration, and once a decision is made, it is planned that these will be installed during the scheduled 2024 turnaround.
An emission reduction technology that is in its infancy is carbon capture and use, and many of you would be aware of our long-term investment in Mineral Carbonation International. MCI's research into the manufacturing of building products from direct CO2 capture was highlighted at the 2021 United Nations Climate Change Conference in Glasgow. We are delighted that our Kooragang Island facility has been chosen for its first demonstration site. This has been made possible again by government co-funding and supportive regulation. The MCI plant will start taking CO2 directly from the Kooragang Island ammonia plant in 2023. We are confident the results from the demonstration plant will provide a strong case to the government and investors to upscale the technology and build a larger scale plant. Importantly, these two examples are indicative of our investment commitments in reducing emissions.
They are indicative of our proactive and swift actions that we have taken to meet these commitments, and alongside our feasibility study into green hydrogen at Kooragang Island, demonstrate our support for emerging transformational technologies. Beyond our site boundaries, it is also fair to say that Orica can act as a catalyst for change within the regional business communities within which we operate, and this is reflected on slide 90. At Gladstone, we have two important collaborations, namely with Alpha HPA, as an excellent example of how commercial partners can develop circular economies. In this example, Alpha HPA will take ammonia and nitric acid from Orica's Yarwun plant to produce battery materials for the electric vehicle sector and then return ammonium nitrate back to the Yarwun site, which is a by-product of their manufacturing process.
Secondly, with H2U, backed by Mitsubishi Heavy Industries, to look into the development of a large vertically integrated green hydrogen and ammonia export hub. At Kooragang Island, we are working with a growing number of academic, government, and commercial partners on a future hydrogen hub, including Origin Energy, the University of Newcastle, and the New South Wales government. Both the Gladstone and Hunter Valley locations are strategically located and have been formally identified as future hubs for green hydrogen by both the federal and state governments and the broader investment sector. The potential role for Orica in green hydrogen is exciting and has the potential to secure jobs and industry for these important regional communities. That said, we are at the early stages of transitioning these precincts.
We will continue to face many challenges, including scaling up the technology to commercial levels, reducing the capital costs of electrolyzers and the price of renewables, securing adequate government support, and developing demand and margins in traditional and new markets. We will continue to rigorously assess the commercial case before we commit to next steps and will maintain optionality around what role we can play in the green hydrogen supply chain. While there are many challenges, we also see opportunities, and through collaborative partnership, we believe it will provide Orica with a number of strategic options in our journey toward net zero. To end off the sustainability section, I'd like to draw your attention to slide 91, where we focus on working with our traditional mining customer base.
Alongside our best-in-class safety proposition, we believe Orica is well-placed to differentiate our products with the mine site efficiency gains from our unmatched range of enhanced blasting and monitoring technology solutions and with the subsequent reduction in environmental and carbon footprints. Over the coming years, product innovation focused on safety, efficiency, and reduced emissions will continue, and this will ensure Orica retains its leadership in the sector. This, we believe, will future-proof shareholders' interests at a time of heightened disruption and change as the world and industry decarbonizes. Thank you. The one thing I think you'll be pleased to know is that as we go into the finance priorities section, we're not gonna be playing a video because I can only imagine how dry that would be. Turning now to the exciting subject of finance priorities and more specifically, our approach to capital management and cash.
Two critical components that will enable us to realize not only the growth opportunities that each of the regional presidents has spoken about today, but also allow us to continue to invest in the technology capabilities that Angus has spoken about, which will drive value for both Orica and our customers. As is shown on slide 94, we remain guided by a capital management framework which governs our actions towards the maintenance of a healthy balance sheet. This framework is predicated upon three key principles, namely maintaining an investment-grade credit rating, preserving the flexibility for future investment alternatives and to respond to changes in the external operating environments, and maximizing our returns to shareholders.
This approach has been in place since 2016 when we made several material changes affecting our financial profile, including, we transitioned from a progressive dividend policy to a dividend payout ratio policy of 40%-70% of underlying earnings, something we have successfully maintained throughout the COVID-19 pandemic at a time other companies suspended dividends. We have also embedded an approach toward capital investment, which drives a disciplined assessment of all capital approvals, taking into account affordability and the delivery of a targeted improvement in return on net assets. Finally, we operate within a targeted gearing range of 30%-40% to better align with key credit metrics that underpin our credit rating. If we turn to slide 95 entitled Capital Expenditure. As I've already mentioned, we have embedded a disciplined approach toward the assessment of capital expenditure.
All capital expenditure related to safety, environment or regulatory requirements is prioritized, while other capital expenditure is subject to financial hurdles and ranked according to a rigorous prioritization process. This capital allocation process ensures sustenance capital is available to support and maintain the asset base. It results in the best growth opportunities being favored over lesser returning alternatives. It drives a focus and culture towards the delivery of increased return on net assets, while at the same time delivering sustainable shareholder value and return on investments. It is our belief that this focused approach toward capital investment has driven an improved, focused and sustainable capital expenditure profile that balances the enthusiasm of the business with the need to maintain a healthy balance sheet.
Importantly, following the completion of the Burrup commissioning in late 2020, we do not see a requirement for further material investment in additional ammonium nitrate capacity in our major markets. We are comfortable that we can meet demand as we move forward without significant capital spend by leveraging both our existing manufacturing capacities and third-party supplied ammonium nitrate. With the completion of the SAF project in 2020 and subsequent stabilization efforts in 2021 and 2022, additional capital has been freed up and has been applied towards an increase in sustaining capital toward a further improvement in plant reliability, as Leah has already mentioned. Further incremental investments in growth projects and technology investments, and importantly, increased investment that will ensure Orica meets its commitments to decarbonization and sustainability.
Furthermore, we will continue to evaluate our asset portfolio to liquidate non-core land holdings as we have successfully done in the past. These will be monetized for cash, which can be deployed toward investment or the acquisition of higher-performing assets. Turning to cash conversion on slide 96. We operate within a targeted gearing range of 30%-40%, which aligns toward other key credit metrics underpinning our BB B credit rating. As I've previously mentioned in the half year results, 2022 will experience an increase in trade working capital that is expected to continue in the near term. As you are aware, ammonia is the primary raw material in the production of ammonium nitrate and is a significant cost driver which impacts inventory valuation when prices increase.
In the first half of 2022, key ammonia indices, namely the Far East CFR and Tampa CFR indices, have increased 67% and 144% respectively, as shown in the charts on the left. The increase in inventories is not altogether unexpected given the significant increase in raw material input costs, as well as the need to secure additional and alternative sources of ammonium nitrate following the cessation of third-party ammonium nitrate purchases from Russia, which has historically accounted for a significant portion of Orica's ammonium nitrate needs. This, alongside the impact of significantly increasing inflationary pressures across other key raw materials, impacts not only inventory valuation, but also trade receivables values, which will impact trade working capital and cash conversion in the 2022 financial year.
Importantly, our focus remains on trade working capital days, which is expected to increase as a result of increased inventory holdings to counter supply chain dislocations, including freight. This is something we are monitoring closely to ensure levels remain appropriate. Turning to slide 97 entitled Debt Management. As previously mentioned, Orica maintains a conservative and balanced approach toward debt management. We value our investment-grade credit rating, which is currently positioned by Standard & Poor's at BBB negative outlook. Our credit rating secures us access to the committed debt facilities we require and allows us the ability to do so on desired terms in exchange for appropriate pricing.
As a result, we maintain strong and mutually beneficial relationships with several international and domestic banks, as well as US bond holders with whom we maintain an active relationship and dialogue. We have an appropriate distribution of debt maturities, which is further complemented by our actions to proactively refinance maturities in advance of our requirements. In this respect, during the second half of this year, we renegotiated and extended $299 million of committed debt facilities with existing group relationship banks. This involved approximately 22% of our total committed bank facilities, including a refinancing of $249 million of 2022 maturities and a pre-financing of a further $50 million of 2023 maturities. This refinancing has resulted in an extension of our average committed debt facility maturities from 3.8-4.2 years.
We have a $80 million bond maturity in October this year that we will refinance with existing cash and undrawn bank facilities and a larger $350 million maturity in September 2023 that we will refinance next year. Our current cost of funds is approximately 3.8%. Approximately 60% of our drawn debt is fixed. To wrap up, one of my key priorities in the role is to continue our disciplined approach to capital management and cash. As a company, we remain focused on ensuring that allocated capital delivers at or above the respective hurdle rates, cash generation remains strong, and that our overall capital management program delivers attractive returns to our shareholders over time. With that, I'll now open up to the audience for questions to either Leah or myself. Thank you.
Thanks, Chris. What I'm gonna do is I'm just gonna extend the next question time to a little bit more. Instead of closing at 1:00 P.M., I think we'll close at 1:15 P.M., if that's okay. There's a lot of good questions coming through the line, and I'm sure there'll be some questions from the room, too. Let's start with John. John's been putting his hand up for a little while. John, over to you.
Thanks, Delphine. John Purtell from Macquarie Group. Look, thanks for the presentations today. Just have a couple of questions, sort of more broadly. Just in terms of a likely global growth slowdown that we're seeing, you know, which end markets or regions do you think Orica's going to be most resilient in and which do you think there's more sensitivity or more exposure?
It's John. It's difficult to predict, given the volatility that we are seeing there, interest rate hikes coming through, inflationary pressures across global economies. A lot of these economies are pretty resilient. The macros that we look at tells us that demand for hard commodities are going to remain strong given that there's significant supply constraints because there's a lot of capacity that's not in the market. There will be a correction. We have seen some commodity prices coming off those very record highs if you look at gold or copper or iron ore. But they're still at a very, very healthy level, and we still see very strong demand across the board. I think the bigger constraint is supply. This is twofold.
One is the limited capacity that our customers have in terms of ramping up production to fill big holes like Russia or China. The second major issue is the uncertainty coming out of the ag space. Obviously, you know, the resource industry competes with itself in terms of hard commodities versus soft commodities, and there are other different priorities at play here. How will that play out? That will have a significant impact overall on supply and demand as a macro. That's something that we're watching very carefully. Energy inflation is here to stay. I think at the last results, I made a statement, I'm not so much worried about energy pricing or electricity pricing. I'm more worried about availability.
Unfortunately, at least in our country, but in many other economies, that statement came true, so I should basically shut up. Because today, the challenges that some of our suppliers who we depend on, tier two, tier three suppliers who do a lot of work for us and who are not contracted on power or gas, they are really suffering. That's not just an Australia story, it's a global challenge. All of that just challenges the entire global supply chain, and it creates short-term disruptions, and it causes volatilities. The big question is will there be demand destruction coming out of inflation? It's very difficult to say. Everybody has their own opinion here. A combination of demand destruction and oversupply would be a problem. I'm not concerned about oversupply. I'm concerned about undersupply.
If demand destruction comes and stays for a period of time, that is something that, our industry will weather, and we'll come out better on the other side. You know, we are creating, at least within Orica, that resilience and robustness in terms of flexibility in our supply chains, in terms of ability to breathe using our partners and our own networks and all of that, and we are relatively well prepared for this. I have a bigger concern, and that is supply ability across the industries for everything, products and services. This is gonna be a challenge that, all of us will have to tackle. I know it's not the answer you're looking for. It's a very difficult. There's so many moving parts here.
One thing is sure, there'll be volatility, there'll be external factors that will be becoming which we cannot control. That's why it's very important that Orica focuses on the execution of the strategy and don't get distracted. Focus on what you control, focus on what you influence, and try to come out better at the end of this amazing cycle that we are going through currently.
Thank you. Just a second question. You've mentioned that your plants are fully sold.
Yeah.
You know, the broader question is, how do you meet stronger demand in that context? I know, Chris, you just touched on some aspects of that, but does that imply that, you know, the incremental tons to meet that demand will generate more a traded margin than a manufacturing margin?
It'll be a bit of both because we have room to play because all of our plants always have latent capacity. I don't see here a need, and I think Chris Davis mentioned this, that to build a new ammonium nitrate plant somewhere in the world. Each of our factories, both continuous and discrete, have enough latent capacity. It's all about smart, low capital debottlenecks to address supply chain issues. I mean, Leah talked about a few, Herman mentioned a few, right? You build a tank here, you build a pipe there, you add a warehouse, you add bagging capacity, you change the nature of the product so it's easy to ship. All of this does not need a lot of capital. It frees up immediately, in a very short period of time, capacity within the network.
That always gives us the opportunity to manage demand surges. If customers would come and ask us for millions of tons, we would obviously politely decline. If there are growth customers willing to pay us the right value for our products and services, we are more than happy to cater to that need with those small measures which are all already in place. Flexibility and resilience of our manufacturing and supply network is absolutely key to do that. Then obviously, our partnering strategy where we make as well as buy helps us to breathe and manage with those spikes in demand. The other way around, if demand would slacken, we will have all of these moves in place which are no-regret moves and, right?
We would still have that flexibility in play to play up both an upswing in markets, but also if there's a potential downswing sometime in future, we would be in a much better position to negotiate them. As one example, when we buy gas or ammonia across the globe, we are locked up in take-or-pay contracts, which means that even if there's no demand for our products, we still have to consume that raw material or pay penalties. We have started flexibilizing those contracts so that we are able to breathe here. We don't have this big pressure, going back to your question, why do we keep pushing volumes into the market the market doesn't need?
That was another factor to it because we were forced to do that because we were tied up in these kind of supply contracts and either you pay a penalty to your raw material supplier or you dump the product in the market. We don't have to do that anymore. We've brought that flexibility and resilience into the procurement strategy that Leah and the team, global team have been driving, and that also gives us more flexibility to play around with capacity spikes as well as dips. It just keeps us in a better position than we were, say, two, three, four years back.
Thank you.
Question from Daniel.
Daniel Kang from CLSA. Couple questions for Leah, please. Just on lean, how far are we in the process or the journey of lean? Just wanna get an understanding of the potential magnitude of the benefit that's likely over the next few years.
No-
First one.
No, great question. Lean is about looking at the network and removing waste from the network. I would say that our manufacturing sites are well developed in this area. We've been focusing on really ensuring that we're valuing the entire workforce, driving initiatives and opportunities, removing waste, removing scrap. That is well established. Our opportunity is in the supply chain network and really looking at our network as a whole. We've been investing in modeling programs to look at optimizing and reducing our lead time to customers, really looking at flexible and smart distribution network, and very small investments to make sure that we can improve the lead time and reduce over time our cost to serve. I would say well established in manufacturing. The big opportunity is in supply chain, and that's where we're developing that.
In terms of magnitude of cost savings?
For us, it's about small increments over time. We talked about there's certain things around input costs for AN that we're just trying to offset inflation. That is our key value there. As far as magnitude, we will be delivering, you know, offsetting of inflation year after year. That's the plan we have.
That's good. Just on the optimization piece, where are you in the process of, I guess, studying, say, debottlenecking opportunities? What's the magnitude and the costs of that opportunity?
Yeah. We've got a signed off strategy in regards to our discrete manufacturing network, and we're pretty much completed on the first phase. We talk about growth. We are limited on growth of AN, but we actually haven't talked about the opportunity with discrete manufacturing. We're actually doubling our capacity of electronic blasting systems by 2025, and that is really low cost investments. That is our next phase of the strategy, is to actually put low cost EBS assembly close to our customers. That's going to drive value, and it's a high margin product and an important growth enabler. That's part of really the leveraging strategy for quarries and construction vertical.
Okay.
Okay. Thanks, Daniel. I may just turn to a couple of questions for you, Chris, from the line, if I may.
Sure.
Why wouldn't second half deliver a reduction in TWC given ammonia prices have declined since the first half?
I mean, I think ammonia prices have come down a bit, certainly not to the levels that they were in September last year. That said, what I had indicated at the half year is that we've done a number of prepayments to secure inventory, and that was treated as non-trade working capital. Now as that's converted itself to inventory, it's gonna lift the value of trade working capital. We've also increased our inventory holdings to ensure security of supply for our customers as we've been taking product from these new sources of supply. Unfortunately, in some respects, those new sources of supply are on either cash up front or shorter payment terms than what we traditionally had before.
The other thing, as many of you will know, the second half is traditionally stronger than the first half of the year, so we have increased inventory and trade receivables to deal with that.
Thanks, Chris. There's a quick one here. How much of the debt is on fixed versus variable?
I did actually say it during the course of my speech. About 60% of our debt is on fixed rates, and we average at the moment about 3.8% on cost of funds.
Okay. A very last one for you on RONA. Is RONA used as a metric to evaluate CapEx projects and also the entire company? Is there a target on where RONA would be over the next three years versus now?
Yeah. We evaluate all capital expansion as well as the business on RONA targets. Now, the RONA targets, we've historically said, you know, it's above 18% for individual capital projects. Now, when we look at it from a group perspective, we've put a target out there of 10%-12% over the next three years. We still remain committed to that and to the extent we can do better, we'll go for it. But that is our commitment now that we do not wanna disappoint on.
Thanks, Chris. Any further questions from the room? Richard?
Thanks very much. Can I just go back to JP's question on the network and the traded margin versus the manufacturing margin? I mean, you're at the moment pushing product out or you have been out of Australia into LatAm. I think it's into Peru. I mean, what options have you got? Or let me first say, is that just margin management or is there some other reason for doing that? And secondly, what options have you got to bring product into Australia if growth in what is your highest margin market is above what you think? And then I'm just interested to get a sense from you, given the regional structure for manufacturing, how do you manage manufacturing margin management, if you know what I mean?
Yeah. The reason we set up the supply chain to take product out of Australia was to have that supply security going, knowing that Russian sourcing would not be possible anymore. As I mentioned earlier, we have latent capacity in all our assets everywhere in the world. What do you do to leverage that? Which means basically sweating your assets, right? It's not easy because on one hand you have capacity, but whether it's in the right shape and form, and secondly, whether there's a supply chain established to move it across oceans to other markets, and then there's customer approvals and all of that. That's an activity we started, and we started with investments to upgrade the quality of the product that comes out, for example, out of Yarwun, so that we were.
We had to get it export ready. We got lucky with timing because as soon as that new investment came into play, markets got tight. You know, there are low months and high months, and especially this year because of the wet weather on the east coast of Australia. We've had a lot of lower months here in Australia where we were producing volumes, but customers were not able to consume them because of mine sites underwater. We just put that into a charter vessel and shipped it to where there was a need, right? We kept the assets running at high utilization, and wherever there was space to breathe, we just put this onto a vessel and sent it elsewhere where we were buying and converted trading margin into own manufactured margin, which is always the smartest thing to do.
That flexibility is today existing now in all facilities. We could do this out of Canada if we need to. We could do it out of Australian plants. We could do it out of Indonesia. Which is a fantastic luxury for us because if a domestic market had a specific issue and we were not able to fill that asset, we don't have to ramp down production. We just put it onto a vessel and take it elsewhere. I think that's just ideal and it just adds to the resilience of the manufacturing network and the flexibility that we needed.
We've done the same with our discrete manufacturing sites where we have now products that can be switched, interchanged, and several products could be made out of the same lines. We can do this very, very flexibly. All of this is basically investment that Leah talked about into flexibilizing and strengthening our manufacturing network across the globe.
Great. Thanks, Sanjeev. This is an easy one hopefully for Leah. Can you remind us what the AN turnaround schedule is, please?
We've got upcoming turnaround in Carseland, which is in October, and we've also got one upcoming in Kooragang Island for nitric acid unit and the AN plant facilities there. In 2023 we have a Bontang shutdown and we also have a Yarwun shutdown coming up for a full site shutdown for electrical upgrade.
Thanks, Leah. There's a question on the line for you, Angus. You mentioned geospatial ore body knowledge gap in the portfolio. How do you characterize that market gap in terms of opportunity and size of the market segment?
First of all, I'll talk to the market. Geospatial measurements or, you know, gyroscopes or multi-shot measurements, they're not new. They've been around for a long time. Anytime you take a measurement, anytime you drill a hole, you need to geolocate that. You can correlate the market with exploration drilling, with r esource development drilling anytime you need an expansion. You can benchmark that to some existing market players.
In terms of the gap, if you look at Orica's ore body intelligence capability today, I talked about the what, the geomechanics and the geophysical, the geochemical measurements. We have built through our own development, through acquisition, a number of measurements and sensors through the RIG and HIG acquisition, through the RHINO sensor. These are geophysical and geochemical measurements. We have the what in the portfolio. We don't currently have a capability in geospatial, hence the gap. In terms of the opportunity, if you buy into the thesis of the industry needing more and better quality ore body intelligence, this is going to be a growth market.
In particular, as you see a transition of those measurements into a while drilling environment. Currently they're done either while drilling or after drilling or during coring to correlate and locate some of those measurements. As you see a transition to more while-drilling measurements, and this is why we made the HIG acquisition, you'll see the need for more geospatial measurements to be run with the geochemical and geomechanical measurements. We think there's a growth opportunity there.
Thank you, Angus. There's a question here, Dan.
Sorry, just a couple of questions for Sanjeev and Chris, actually. Sanjeev, just can you remind me about the situation on the East Coast gas contracts, how you position once your fixed price contracts expire?
Our gas book is covered until 2025, 2026. We've renewed contracts last year. Our gas needs both for Kooragang Island and Yarwun are covered. We've brought in, through these contract negotiations, more flexibility in terms of operating with our gas suppliers. You know that we have multiple gas suppliers, so we are not dependent on any one. Given the fact that we are a major industrial consumer of gas, we are a preferred customer. It was interesting, a gas supplier once told me, "I'm happy to supply a consumer who does manufacturing with gas rather than generate power out of it." That was interesting insight from a gas company.
Obviously, they do prefer to operate with us because we are more consistent, we are more reliable. We have more visibility in terms of our gas needs over the next 10. We could do a 20-year forecast if there was a need to do it, right? With the gas for energy, it's much more difficult given the volatility of renewable energy, solar and wind coming into the grid. We are a preferred so far the gas companies are happy to operate with us and we are covered. We are now thinking about the next round. We have to separate between consumption of gas as a raw material, as a feedstock, which is an important aspect for us.
We have a lot of measures in place to de-link our energy needs or our power needs, because we are an energy-intensive manufacturing organization. We are in the process of de-linking this to gas, right? That we'll have different levers to pull. There'll be some announcements that Christopher Davis will make in the near future about what we are planning to do. Once again, building resilience in manufacturing and flexibility and making ourselves fit for the future. There's a lot going on and as soon as all of this becomes formal, we'll also make it more public.
Thanks, Sanjeev. Chris, on CapEx, with most of the growth CapEx behind us now, sustainable CapEx of about AUD 200 million, is that where we should be forecasting CapEx to drop down to, around that?
Yes.
AUD 200 million?
Yeah. Your sustainability capital expenditure should be about AUD 200 million-AUD 220 million. Growth normally sits at around about AUD 80 million-AUD 100 million, depending on what opportunities come up in any one year. On top of that, we've got the sustainability expenditure. Your tertiary abatements we're putting in place in Kooragang Island. We've maintained a position for this year of, I think it's about AUD 340 million-AUD 360 million. I think going forward it'll probably be towards the top end of that range because next year we have the tertiary abatement at Kooragang Island.
Thanks, Chris.
Well, thank you all. It's now 1:15 P.M. Let's close the Q&A session. For those in the room, you can have some lunch and talk to the executive team there. Before I hand it over to Sanjeev for the final close, can I just remind those who are joining us at the Kooragang trip tomorrow, you've got a very early start. We're leaving sharp at 6:30 A.M. We're meeting at 30 Pitt Street, Marriott. We will provide a little breakfast for you. That'll be something for you to look forward to. We do need to get there as soon as possible. We've got a full session planned for you, so let's make the most of our time. We'll see you there. Please see Joyleen. We need to get you rapid antigen tested before you go.
That's one of the requirements of going into the plant. We've got tests there. You can take it home and do it and then when you get on just declare that you are negative. If you're positive, please stay at home. But with that, Sanjeev, I'll hand over to you.
Okay. Let me start by thanking all of you. Also, the people who joined us virtually. I hope that we fulfilled our or your expectations of giving you a bit more insight into what this management team does, what do we think every day, what went into creating that strategy, and what are we doing in terms of very consequential execution of the strategy despite all the challenges that the world throws at Orica, but everybody else out there in the market. Just quickly running through two slides. We do and we will continue to do a half-yearly update of where we are in terms of strategy update. That's our scorecard for our investors.
Every six months we come up with these key parameters that we monitor very, very closely, and we'll update you on details in terms of execution. This is something that drives us every day, because I've seen in my life, in my career, wonderful strategies being written and then we fail to execute. The focus is now fully on execution. Whatever we do is within the parameters of that strategy, within the guardrails of that strategy, and we continue to focus very, very strongly on this. I think it just we get lucky with timing and coincidence because all those macros that we assumed when we went ahead and wrote that strategy, they seem to come true. We see some positive tailwind at the moment to our business.
All of that will just, you know, motivate the 13,000+ team members of Orica to, you know, even more strongly focus on this and continue to deliver. Finally, I'll leave you with the last slide again. Our focus is clear. We've talked about all of those issues, a deep dive into technology, a lot more onto digital and the other technologies tomorrow at the Kurri Kurri site, which should be very, very exciting. All these beautiful solutions and wonderful investments we've made in innovation that we now bringing to our customers. We start to see the scale coming in, and this will translate into better earnings profile. In the end, we would like to maximize shareholder returns. That's the clear focus of this management team. You've seen and heard all of us in action.
I'm hoping that in future, we'll get them all into a room so that you also can physically meet and interact with them, because these are the folks who do the real work. Delphine, Chris, and I, we are more postmen. We just deliver. Or post people, we just deliver the message. They are the ones who execute. So thank you for that. Before we close, Delphine's team, Joyleen, Renee, Andrew. Andrew is at Kurri Kurri today preparing for to receive all of you tomorrow. Camille and Claudia, thank you very much for organizing this technology work. Everything went through without a hitch. We nailed the timing. I hope that all of you will join us now for a lunch, at least the people here in the room. Thank you all. All the best for tomorrow's visit.