Good morning, ladies and gentlemen. Welcome to Orica's 2018 full-year results. We welcome those on the phone, on the webcast, and here with us today in the room. Presenting today, we will start off with Alberto Calderon, our CEO, followed by Christopher Davis, CFO. Alberto, I will hand over to you.
Thank you, Delphine. Good morning, all. Thank you for joining us in the room, on the phone, and on the webcast. I will ask you to quickly read the disclaimer, which is obviously impossible, so let us go to safety. We achieved our most important objective of no fatalities in 2018. Safety is our number one priority. The total recordable injury frequency rate remained stable during the year, and we are seeing that in some areas, injury severity has reduced. The rate compares favorably against industry peers and benchmarks, but that is not a case for complacency.
Our safety leadership program has been embedded across the organization, and the work we have done to understand our major hazards and ensure all key controls are in place has touched every part of our business. There is more work to do, but I am confident we are making Orica a safer place to work.
Our approach to sustainability is evolving, and I am pleased with our progress. We will have more detail in our sustainability report when it is published in December, so I will just mention a couple of the highlights. We have made good progress with the trials of a new catalyst at Kooragang Island, which will inform our approach to the abatement of carbon emissions into the next decade. That is an important strategic piece of work regarding our direct exposure to future carbon costs. I would also like to mention the work we have done in rebuilding our culture, which has been an ongoing priority since 2015. We measure progress on this through an annual organizational health index survey.
Our results have continued to improve, and our health outcome, which benchmarks the quality of management practices at Orica, has moved from the third quartile in 2015 to near the top of the second quartile this year. We know that culture is critical for delivering performance, and we will continue to work on this. The highlights. Before we go into the details of the results, I wanted to take a moment to summarize the last 12 months. The first half of the year was clearly disappointing. We were not happy with our performance. Nevertheless, I said at our half-year results in May that we were seeing clear signs of continued market recovery and improved operating performance that gave me confidence that we would be able to deliver a stronger second half result, and we have.
The second half of EBIT of AUD 366 million is a significant uplift from the first half result, exceeding our full-year expectation of around AUD 600 million. We are happy with our second half performance, as it sets the basis for fiscal year 2019 and the years to come. The benefits of new contract wins and improvements in the macros during the year resulted in strong volume growth and improved volume mix and margin. This accounted for around AUD 70 million uplift year on year, which Chris will go through later. This benefit was masked by the substantial one-off headwinds in the first half, particularly in manufacturing, due to the unplanned shutdowns and the additional sourcing and freight costs associated with the issues in the Burrup plant.
I feel confident that the headwinds are now behind us, we are making good progress on ensuring that Burrup is up and running in the first half of fiscal year 2020. I will talk more about this later. During the half, we improved the operational performance of our plants, we are starting to see some positive outcomes from the increased operating discipline instilled by the new management team. We also said at the half-year results that we would be working hard to improve cash conversion, we did. There was a substantial improvement from the half, finishing the year in a slightly better position than the prior year. I will talk later about our high-value technology-based products, I'm pleased to say that several of our newly signed contracts have been based on productivity improvements through technology. Results summary.
AN volumes continued to grow, up 5% from last year, reflecting strong demand from new and existing customers. Improved sales mix contributed to the revenue lift of 7%, with EBS sales up 12% year on year. The APA and North American regions were the strong contributors this year, with particularly strong demand in Australia and Indonesia. Despite the significant improvement in EBIT of around 46% from first half to second half of this year, EBIT was down year on year, largely as a result of the manufacturing issues in the first half that I spoke about earlier. The expensive Burrup-related interest costs further reduced NPAT. We're very focused on maintaining the health of our balance sheet, the improvement in cash generation from the first half allowed us to reduce debt from AUD 1.9 billion to AUD 1.6 billion.
Gearing is now at 36%, slightly below 36%, post the acquisition of GroundProbe and the increase in our Burrup shareholding during the year. That's at our lower point of the 35 to 45 range. The board has declared a final dividend of AUD 0.315 per share. Taking the total dividend for the year to AUD 0.515 per share, which reflects a payout ratio of 60% of underlying earnings. This is a significant uplift from a 50% payout ratio in fiscal year 2017. Australia Pacific. The APA region, our highest margin region, contributed over 60% towards EBIT. Explosives volumes were up 14%, or around 200,000 tons year on year, which has largely been due to winning new contracts organic growth.
Around 40% of this increase was from Indonesia, which has proven to be a strong growth market for Orica, and more importantly, has meant the Bontang plant operated at full capacity this year. While the margins achieved in this region are lower than Australia, the returns are very good and way above our threshold. Of 20%, I mean, RONA. We believe the Indonesian market will continue to grow, and as such, have commenced engineering works to expand Bontang's capacity by approximately 30,000 tons at a relatively small capital outlay. Demand grew in the Pilbara region as a result of new contracts and increased commodity prices and strip ratios accounting for around 20% of the increase. However, given the current short-term issues with the Burrup plant, the additional sourcing and freight cost to service our customers have masked the benefit of this growth.
This has amounted to an average of around AUD 200 per ton. We have been asked by some of our key stakeholders about the profitability of our new contracts. These new contracts are value accretive to Orica, but the immediate benefit is obviously masked by the short-term issues at Burrup. These are long-term contracts that will improve the return on deployed assets by significantly more than the 20%, again, hurdle, and will add significant value to Orica in the medium and long term. We're also realizing tangible value from our technology portfolio. We have had very good penetration of EBS, BlastIQ, and BM7s this year. Our customers have an increasing appetite for value-sharing agreements based on our technology and services offerings, and we expect this trend to continue. Turning now to EBIT.
One-off costs in the first half dampened EBIT, but there was a significant lift in the second half, with EBIT up some 29% from the first half. This was a result of improved volumes, product mix, and better plant reliability. Notwithstanding the issues with the Burrup plant, we're expecting EBIT growth in APA in the coming year, with market shares increasing from recent contract wins, continued growth in EBS sales, and further penetration of our new technology offerings. I would like to spend some time on Burrup. As you know, the plant originally ran very well. It produced good quality AN. When issues were identified towards the end of the commissioning, the unique modular nature of the plant design by Yara contributed to the time it took to identify the extent of the issue and developed a plan to rectify those issues.
Whilst Yara, the joint venture operating partner, has been managing these issues for the past 12 months or so, we have now taken an active role in working with the Yara team. This is to ensure these issues get fixed as soon as practical, while balancing the need to make sure we get this right and we have a reliable plant going forward. Some of the initiatives we have taken include appointing our own experienced Orica project manager to direct the project, embedding Orica technical staff in the project structure with key personnel based on-site. We will retain ongoing engineering support on site at the plant following the completion of the rectification activities. We've also replaced our board representatives with manufacturing and technical experts and elevated the project to CEO level with the Yara CEO and myself in regular discussions on its progress.
In terms of the status of the project, the temporary repairs to the heat exchangers, as previously disclosed to the market, have now been completed. All nine new replacement heat exchangers are currently being manufactured in Europe and are expected to be installed in the second half of the 2019 calendar year. Issues with the absorption tower have also been identified for the cooling coils, and columns need to be replaced. A new column will be erected alongside the existing one to minimize downtime for the changeover. There are some environmental issues that have been raised recently, which we're working to resolve systematically. We have had some successful discrete runs of the plant, which produce, again, high quality AN. However, we have yet to test it on a continuous operating basis.
We'll be running the plant as much as possible as construction continues, again, the management bias is towards permanently fixing the plant versus running it in the short term. As a result, we have estimated around 20% utilization in FY 2019. Depreciation and Amortization will only be expensed when we believe the plant is running on a reliable, continuous basis. We remain fully confident that the current issues can be rectified and that the plant will operate successfully. The Burrup plant is a 30-plus year plant positioned in the heart of the Pilbara, where the strip ratios are expected to grow at a 3% plus CAGR over the next five years. For the past 12 months, we have secured contracts to supply ammonium nitrate to BHP from November 2019 and Roy Hill, which came into effect in February of this year.
With these contract wins, we expect the TAN plant to be essentially loaded in 2020. Turning now to North America, it also delivered a strong second half in line with our expectations. Once the impact of changes to our joint venture partner sourcing arrangements are removed, direct sales volumes were strong, up 5% year-over-year, which shows the strength of demand in the region. Volumes were up in Canada and Mexico, and a positive seasonal uplift drove a stronger second half, particularly in the quarry and construction markets for services, detonators and boosters. Full year EBIT remained steady with a strong second half from improved volumes. Second half grew by about 8% due to improved volume services margins and mix and further cost reductions. This result was achieved despite an increase of around AUD 8 million in third party AN sourcing costs relative to 2017.
Going forward, volume and EBIT growth are expected to be steady in the 2019 financial year. We're talking about volume and EBIT growth. Increased penetration of new technology offerings will help drive EBIT growth in the coming years. We have seen very strong demand for BlastIQ platform, and customers are eager to implement the next generation of this platform released in the 1st of October. WebGen has been successfully demonstrated and trials have been arranged with several customers, both for service and underground applications. Turning to Europe, Middle East and Africa. I said at the half year that we would expect a much better second half and similar to the second half of 2017. We delivered this and a bit more.
Second half EBIT of AUD 36 million was boosted by increased AN volumes in the CIS regions, strong EBS growth across all sub-regions, improved performance in manufacturing and much lower fixed cost. The Turkey business, however, was down over 40% on last year due to reduced volumes and the significant depreciation of the Turkish lira, lower cyanide volumes due to mine closures and a contract loss also resulted in a lower contribution. Momentum for the second half is expected to continue into the 2019 financial year, with EBIT growth to be underpinned by volume growth across all sub-regions and improved margin from more profitable EBS growth and new technologies. Latin America. Overall explosives was down 3%.
Higher volumes in Chile were offset by delays at a customer mine site in Colombia, mine closures in Argentina, and a partial contract loss in the second half, which impacted both AN and EBS sales. At the half year, we expected the second half EBIT to be similar to last year. While there was good improvement relative to the first half result, we did not hit that goal. Continued competing pricing pressures on explosives, the partial loss of a significant contract and increased overhead costs due to high inflation impacted the result. We view these as short to medium term challenges as the long term fundamentals in copper and gold, which account for around 70% of the region's revenue remains strong. The contract pipeline from fiscal year 2020 onwards is very strong.
We were recently awarded a substantial long-term underground project for a major mine in Chile, which is where we had lost the contract, so we were quite happy with that. We also in Peru were awarded probably the largest contract in Peru. We have appointed a new president for the region who comes not only with extensive global experience, but also has deep knowledge and understanding of the competitive landscape of the region. The area business managers are also significantly new. An operational review of the business has commenced focusing on right-sizing the business. We will talk more about this at the half year results. Minova. We're now beginning to see some progress in the business. Revenue is up 14% on the year, mainly from higher steel product sales.
The new management team appointed earlier this year has substantially reduced overhead costs, which has had a positive impact in the last quarter of the year and will continue into the next year. I've said in the past that probably this has been disappointing and why it took so long. At least I'm happy that for the probably first month in a row, we've now seen a stable contributing EBIT of between AUD 500,000 and AUD 1 million per month, and we expect that to converge towards the higher end. That final transformation is starting to come through finally. Auxiliaries. The acquisition of GroundProbe was completed in January 2018, and its integration has been successfully completed. GroundProbe is a global market leader in the provision of critical monitoring and measurement technologies for the mining sector.
One of the main synergies of the acquisition was leveraging Orica's global network to accelerate the penetration of GroundProbe solutions into sites currently not serviced by GroundProbe. We are already seeing the benefits of this and a strong pipeline of future opportunities has been developed. The underlying contribution from GroundProbe in fiscal year 2018 is slightly above the investment case assumptions. On acquisitions, we said that GroundProbe would be accretive in the first full financial year of ownership, and that's going to happen. We are confident it will deliver also somewhere around 10% of RONA in the first year, which is fiscal year 2019, and +15% RONA within three to five years. I will now hand over to our new Chief Financial Officer, well known by most of you, Chris Davis, to go through the financial performance.
Thanks, Alberto. If we look at the key financial metrics, sales revenue for the year was over AUD 5.3 billion. This is up 7% from the prior comparable period, mainly from the Australia Pacific & Asia and North America regions. Revenue in the APA region increased by 13% year-over-year, reflecting both volume growth and improved mix. Revenue in North America increased by 5%, with volume growth in both Canada and Mexico on the back of new contract wins, as well as the restart of a number of mines. The significant uplift in earnings in the second half that Alberto has already spoken about has resulted in both EBITDA and EBIT being only slightly below last year. Underlying EBITDA increased by 34% from the first half to the second half, and underlying EBIT increased by over 46% over the same period.
Underlying NPAT of AUD 324 million was lower than the prior comparable period, largely as a result of lower earnings and increased net interest expense, in line with higher debt levels and on the back of acquisition activity and interest on Burrup no longer being capitalized in 2018. Statutory net loss after tax of AUD 48 million was impacted by individually significant items, which I will go through in the next slide. The effective tax rate increased to 32% in 2018. This increase was due to reduced profitability in jurisdictions with lower tax rates and reduced foreign deductions. Looking at individually significant items, to recap, in March this year, we flagged that we would be taking some non-cash adjustments in the first half of the year.
This included a non-cash impairment of AUD 204 million to the Minova business, an increase of AUD 115 million to our environmental provision for remediation of the Botany site, and a one-off restatement to the value of our U.S. deferred tax assets as a result of the corporate tax rate changes that occurred in December 2017. In March, we also flagged that we commenced further streamlining of the business across each of the operating regions, which would result in further reductions to overall headcount. This program commenced during the year and is expected to deliver an incremental AUD 50 million per annum in benefits. Given the substantial size of the restructure, we have accounted for these one-off costs of AUD 35 million as a significant item. So in total, the value of these significant items for the year is AUD 372 million after tax.
Looking at the EBIT bridge at a high level, inflation on fixed cost overheads had an adverse impact of AUD 26 million, which was in line with our expectations. This was marginally offset by FX. In terms of headwinds and material input costs, the AUD 16 million is the last flow-through effect of the increase in contracted gas prices in Australia and AN prices in North America, which were effective from January 2017.
Contract pricing. Contract renewals have continued to align to current market prices. The impact of contract pricing of AUD 27 million for the year was lower than expected. This is a reflection of price stabilization as we start to see positive benefits on renewed contracts. As mentioned at the half-year results, there is a deferral of some contract renegotiations to the FY 2019. As a result, we expect the impact in 2019 to be a negative AUD 25 million.
Volume mix and margin increased AUD 70 million. New business and improved demand from existing customers, particularly in Indonesia and Australia, drove an increase in AN volumes of 5%, contributing to an increase in EBIT. A higher proportion of emulsion product sales also contributed positively to EBIT. Sales of EBS increased across most regions, with a combined increase of 12% in EBS volumes compared to the prior year. Global manufacturing inputs. This negative AUD 12 million impact reflects the unplanned maintenance of shutdowns at the Yarwun and Kooragang Island manufacturing plants in the first half of the year, which led to unrecovered labor and operational costs as well as higher short-term third-party product purchases. Operations at Grasberg were also reduced as the site continues to recover from the explosion in May 2017.
The improved focus on manufacturing reliability in the second half has helped offset some of the AUD 20 million impact originally reported in the first half of the year. In terms of the Burrup plant, Alberto earlier gave you a very comprehensive update on the plant's progress. At all times, servicing our customers' requirements has been the number one priority for us. The AUD 26 million negative EBIT impact represents the continued sourcing and freight costs associated with securing AN to meet our customers' needs, as well as the commencement of administration overheads in anticipation of the plant operating. We thought it was important to identify these costs separately as a component relates to sourcing costs that are temporary in nature and will not be repeated once the plant is up and running. Minova.
After adjusting for the one-off asset disposal in the prior comparable period of AUD 8 million, Minova's EBIT declined AUD 7 million due to unfavorable mix and cost pressures, despite increases in volume and revenue. As Alberto mentioned, there has been a positive trend in EBIT in the last quarter of the year, and we expect that to continue into 2019. Auxiliaries represents the contribution from GroundProbe and Nitro Consult that was set up as a new segment in 2018. Included in the number is AUD 6 million of acquisition costs. GroundProbe is now in its first nine months of ownership. As Alberto mentioned, this year's underlying contribution is ahead of the investment case, and we expect this trend to continue into 2019 and beyond.
The last bar of AUD 32 million is comprised of lower implementation costs and fees associated with the Business Improvement Initiatives program and the early benefit from reduced people costs following the restructuring activity that took place during the year. In addition, following the increased provision on the Botany groundwater treatment plant taken in the first half of the year, all related costs are now offset against the provision. Turning now to capital expenditure. We continue to practice a disciplined approach to capital management. As mentioned over the past few results, at all times, we will ensure that CapEx related to safety and environmental obligations are maintained. In essence, capital allocations for these purposes will not be subject to financial metrics. All other capital requests are the subject of rigorous review and approval processes. At AUD 322 million for the year, capital expenditure is in line with our expectations.
The implementation of the SAP project across the organization is progressing well, with increased spend in 2018 in line with the ramp-up of this project and in line with our expectations. The cost of the maintenance shutdowns at KI and Yarwun are included in sustenance capital, as well as the ongoing investment in our MMU fleet. Growth capital has increased year on year due to an investment in assets to support new contracts in Australia and the CIS regions, as well as an investment in infrastructure to support sales to the agriculture market. Going forward, we believe that capital expenditure will be approximately AUD 350 million in 2019 as the SAP implementation project nears its final stages and we continue our investment in our MMU fleet. Despite that, we continue to maintain our guidance that capital expenditure will remain within the AUD 300 million-AUD 320 million range from 2020 onwards.
Depreciation and amortization for 2019 is expected to be around 10% higher due to the commencement of depreciation on our investment in IT infrastructure and the new MMU fleet. Looking at cash and debt. The performance in the second half has delivered a targeted improvement in cash conversion, which at 71% is aligned with the prior year. This has been achieved through a stronger EBITDA performance in the second half and a focus on trade working capital management. Whilst net debt has increased AUD 207 million against the prior comparable period, this largely reflects the acquisition capital deployed in 2018 for the purchase of GroundProbe and the additional 5% shareholding in Burrup, which together accounted for AUD 249 million. Importantly, gearing at 35.7% remains at the low end of our targeted 35%-45% range. We remain committed to maintaining a strong and flexible balance sheet through the cycle.
With that, I'll now hand you back to Alberto. Thank you.
Thanks, Chris. In considering our strategy and how we allocate human and capital resources, we categorize our priorities in each of our three discrete lines of businesses. There's a manufacturing and supply, where we are a cost leader. There's the field services, where we are market leader. Then there's the productivity solutions, where we are a value differentiator. While these lines of businesses are highly complementary, they're distinct in terms of their competitive environments, key success factors, capital intensity, required management approach, and the skills and capability to be successful. The primary focus for manufacturing and supply is delivering cost leadership through high levels of reliability and utilization. The physical location of our manufacturing assets close to target markets provide a strategic competitive advantage. This is supported by strategic third-party sourcing. Our scale, global reach, and expertise in moving regulated materials is also central to our competitive advantage.
Field services have long been the heart of our business. This is a contract management business that leverages specialist products, people, and in-field assets to deliver safe, reliable, and high-quality field services. Our field services network of over 400 locations around the world allows us to build industry-leading capability and leverage knowledge across the globe to deliver efficiencies and manage risks. We're committed to be the industry leader in new technologies that shift the market from conventional commoditized products and deliver productivity improvements for our customers. A big part of our future is the evolution of new technologies in digitally enabled blasting, automated charging, and in-field measurement technologies. We're focused on sharing the value we create for our customers so we can create value for our shareholders. I think I flipped the slide too early. Now this is manufacturing and supply.
Our commitment to improving our manufacturing performance is paying off. We have seen significant improvement in the second half of the year. Except for Yarwun, all plants achieved above our 80% target for overall equipment efficiency, which is one of the main measures, OEE, that we track, with Yarwun's performance improving significantly in the last quarter to 71%. To give you an idea of the magnitude of this, when we were recommissioning and we had the issues in November and December of last year, we were producing in Yarwun around 20,000 per month, and we're now producing around 40,000. It's a massive difference. When you look at the 20,000 or 40,000 that we didn't produce, well, we had to go and buy it elsewhere. That was the origin of the temporary but significant impact on manufacturing that we saw in the first half of the year.
I have to say, I am quite happy to see all of our plants above our target of OEE of 80%. This is again, probably what we've been focusing in the past 24 months. Our plan is to get Yarwun close to that 80% soon. We will continue to focus on ensuring our continuous manufacturing plants are reliable and can help us to capitalize on the stronger demand outlook. We expect further improvements from Yarwun in FY 2019. Are also looking to debottleneck our plant in Bontang in Indonesia to meet growing local demand. Just to do another sort of high-level numbers of the leverage of this manufacturing for next year with Yarwun performing better and not having the issues that we had in KI and Yarwun, that's about a AUD 30 million uplift in 2019 versus 2018. It's a significant leverage.
Resolution and commissioning issues at Burrup remain a big value driver for our manufacturing business. The initial state of rationalizing our initiating systems product portfolio is complete. We have reduced our SKUs by more than 30%. This initial stage was primarily concerned with removing obsolete and superseded product and materials. While there are some minor financial benefits to doing this, it is also an essential first step in stabilizing a baseline of current products in the portfolio, which can then be more effectively reviewed. In the next stage, we will address overlap and redundancy in current products. This will increase manufacturing efficiency, improve network security of supply, reduce asset footprint, reduce working capital, and increase overall asset returns. You should expect us to continue to be talking about this every six months. We expect to achieve significant financial benefit from this project over the next two years.
Blasting field services. Our differentiated value proposition makes us an ideal partner for our customers. Sales of new technology have been showing a positive contribution since the transparency of technology sales was established in fiscal year 2016. Year to date NT5, so new technology in the last five years, results are on target to exceed plan with year-on-year growth of more than 30%. That number was about 18% about two or three years ago. Our customers are recognizing these capabilities with a further improvement in our net promoter score in 2018. Commercialization activities are progressing well for two key field service product tools, BlastIQ and BM7 trucks. The following slides outline how these products create value for our customers and for us. BlastIQ.
BlastIQ is a cloud-based platform that collects the wealth of data relevant to blasting on-site and puts real-time information in the hands of the teams who manage the blasts. When they can see the impact of blasting on the entire value chain, it improves regulatory compliance and leads to lower cost, better productivity, and safety outcomes. The economic benefits for both the customer and Orica are compelling. For the customer, drill costs have reduced by around 10%. We have delivered productivity improvements of around 5%. For Orica, this is a license offering, so we get direct recurring licensing revenue. We also share the savings from increased customer productivity. We have more than 40 customers using BlastIQ at more than 120 sites, with version 2 currently on global release.
As you will see in the next slides, the new technologies investments is starting to pay off and starting to go to the bottom line. Bulkmaster 7. Our new mobile manufacturing unit, Bulkmaster 7, can deliver significant cost savings of around 10% to the customer by reducing the labor and assets required on site. You see it requires 15% less operators, 20% less assets, and the delivery rate improves by 46%. These are big numbers that, again, go into the bottom line of our customers and ourselves. We share in the value by operating at a lower cost base and through the licensing revenue from BlastIQ, which is an integral part of the BM7. We currently have seven BM7s in operation in Australia, but we'll introduce roughly 20 units per year for the next five years.
That will significantly change the composition and, again, the quality of our fleet. Hopefully, we can go a bit faster than that. Productivity solutions. We have a strong record of delivering value through technology. Our newly acquired GroundProbe business is at the forefront of mining stability monitoring, and it also expands our overall digital capability and customer offering. We have identified around 100 mines where GroundProbe could leverage Orica's existing presence and customer relationships. The opportunity for customers to use Orica sensitive blasting and GroundProbe's risk assurance monitoring to steepen pit wall represents a very strong value upside for our customers and Orica. WebGen, which we hold a patent on, is the world's first wireless blasting system. It is putting our customers one step closer to automation in drilling and blast.
We are removing the constraints imposed by wire connections. It can fundamentally change the way blasting and mining is approached, which lifts productivity. We have recently signed a long-term commercial WebGen services agreement in North America and currently have five active trial sites in Australia, North America, and Latin America. I will take you through its commercial benefits next. The second generation, WebGen 200, is currently under development and due to release in 2020. This will further expand the market opportunities in underground and tunneling applications and will open a new market, open cut application. The commercial benefits of WebGen for both the customer and Orica are also compelling. From our customer trials to date, there has been around 34% improved ore recovery to reduce dilution and 20% increased productivity through digging and hauling efficiencies.
WebGen for surface mining will ultimately enable multi-seam blasting, where you can drill and load multiple passes at once, but then blast sequentially. This provides significant productivity improvement by removing constraints from the mining sequence. This multi-layer blasting is what we will start doing with our largest customer in the Pilbara with BHP. That's the plan. For Orica, this unique differentiating technology and services offering will deliver a significant return on investment and is equally important, the precursor for blast automation. Let's turn finally to the outlook. As I mentioned at the start of the presentation, we're very happy with second half performance as it sets the basis for growth in fiscal year 2019 and beyond. Higher revenue and EBIT will be underpinned by increased demand and manufacturing improvements.
Global AN product volumes is expected to be around 3% higher than fiscal year 2018, with continued growth mainly in North America and Australia Pacific & Asia regions. We expect continued firming of AN pricing across most regions. Contribution from some new advanced products and services contracts in the APA region will benefit the second half. EBIT growth is expected from all regions and businesses except Latin America. We will continue to focus on improving the average utilization rates in our operational plans. As mentioned earlier, we expect around a 20% utilization rate at Burrup as work continues in order to get the plant available for use at its name plate capacity, which is the main objective. We're expecting a marginal EBIT impact relative to fiscal year 2018 and fiscal year 2019.
Based on APA's new advanced products and services contracts coming into effect in the second half and the normal seasonality skew, we expect the split for the first half and second half for fiscal year 2019 to be more towards 45/55. Chris spoke earlier about the tax, capital expenditure, and depreciation. To sum it up, improved operating leverage from the second half result underpins a stronger fiscal year 2019 result. Beyond fiscal year 2019, I believe that we now have got a strong platform to deliver the improved returns to our shareholders. As I said at the start, I feel confident the headwinds are now behind us, and we're making good progress on ensuring that Burrup is up and running in the first half of fiscal year 2020. Our operating leverage should increase from volume growth and as we continue to improve plant utilization and generate more cost efficiencies.
I am confident our evolving productivity solution offerings in digital automation and field measurements are the key to Orica's future. With that, I now open to questions and thank you. We will now take questions from the floor and from the phone. We start probably with the floor. Richard?
Thanks, Alberto. Richard Johnson from CLSA. Alberto, one of the things that caught my eye was the performance of the turn in the performance in Europe, and I was just wondering if you could talk a little bit about the changes that Tom's made there and whether there's any structural reason that division can't get back to historic levels of profitability.
Basically, Tom has new CFO, new HR, new Africa, ABM. Most of the area business managers are new. New guy in Russia. He spent some time, and that we showed a little bit of that impact in the first half. I think the act is coming now together. He has a strong team, and we're starting to see the results. The guy in CIS, for example, has done a great job, and it underpins most of the improvements in the second half that we're seeing. In Turkey, even though the lira collapse and all of that, the relationship with the joint venture is much better probably than it has been in the last 15 years. Tom has improved that relationship significantly, and it is a big area of future growth. Europe is doing well. Quarry tunneling in Norway is doing very well.
Africa is probably the one that is still lagging from its full potential. Having said that, I do believe that that area can continue to be one of the areas of, let's say, high-level EBIT growth into the future.
That's helpful, thanks. Just one for Chris. On the central cost line, which is obviously a little better than we'd expected, I'm sure, for the market generally. Can you just talk a little bit about the, or give some explanation around the asset sale contribution, most importantly, the year-on-year delta from asset sales?
Okay. The year-on-year delta from asset sales, as you'll see, is about AUD 2 million. There's obviously profit last year on the sale of businesses. That AUD 2 million contributes partly to what's happening in the year-on-year global support. If you look at the global support, as I mentioned in my speech, the AUD 12 million that we spent in the past on the Botany environmental legacy at the site. Because of the increased provision that we now have on board, that goes against the provision and is no longer sitting in the costs.
Okay. That's great. Thanks. Then finally, Alberto, when we look at SAP, can you remind me what the total cost of that investment is? Then how do you think about the return on that investment, or how should we think about that?
Look, the total cost is going to be around the AUD 250 million point, which in my, whatever, 18 years on SAP, it will be the most efficient SAP project to date. It's quite interesting. The reason for that is it's cloud-based, but also SAP is doing a much better job in ensuring that we have available world-class processes that you just take straight off the shelf in the financial and others. A big part of the cost in the past was Accenture would get the big part of the pie as you do your own sort of "world-class processes." A lot of that has been taken from the shelf. There was an old Caymus project in Orica from five years, and that was an AUD 500 million project. It's quite efficient from the point of view of cost.
From the point of view of impact, the impact is going to be incalculable. I can't tell you how much it is, but I can give you ideas of what. We already have release 1 and 2 ready, which is contracts in system and all the HR processes. Every time I ask something on HR, it took two to three weeks to do it manually because we had so many systems around the world. Now it's on real time. We know exactly by region, division, billable, non-billable, where it grows. The level of control, everything that we've done breakaway, we probably could not keep without a system like this. We have taken in breakaway, improvements, let's say, we don't call it breakaway, but system improvements, efficiency improvements, is AUD 300 million or AUD 250 million. We could not really ensure that they stay out without a system like that.
The release 3 will come in March and October of next year, that will completely transform the type of information we have. We will have mark to market on every single contract we don't have. We will have profitability for SKU. The management of the supply chain will completely change. The amount of people that do in HR around the world, transactional work is about 60%. That could also be probably done more efficiently in shared business services and all of that. I can tell you that the payoff is there's not a single project that will have a higher payoff. It's enormous.
That's great. Thanks very much.
We can go to the phone if you want, then we'll come back here.
Thank you. If you wish to ask a question, please press the star key, then one on your phone and wait for your name to be announced. The first question comes from Mark Wilson of Deutsche Bank. Go ahead, please.
Thanks very much, Alberto. Was just wondering with the Burrup plant, whether you could actually detail what the outstanding issues are. Certainly go through the absorption tower, which looks as though it's a new issue. Then just likely timeline of being able to permanently fix the issue.
Thank you. Mark, for the question, it's related to Burrup. On the project team right now, it's a dedicated project team of 32 people run by probably the most experienced project manager that we have at Orica. We're working very well with Yara again, to be honest on this. They have identified every single piece that would need a lead time to fix. Basically, the two big ones, well, groups, is the nine heat exchangers and the absorption column. That is a pretty fundamental piece of kit. At the origin of the issues is the same thing, which is deficient welding, when it was built in both cases in China. There was no quality controlled that ensured that the needed quality of the welding was in place.
In terms of the absorption column, for example, the issue is that deficient welding has led to acid going into the cooling water system and hence makes it impossible to run it efficiently. You have to run it at a much lower than nameplate capacity, which it's part of the reason why we expect such lower utilization rates until it's permanently fixed. You would say, "Well, can't you fix the welding?" You can't. Again, it's a fatal flaw. That's what the experts tell me, and I believe them. We've had to order those components. They are being built in Europe as we speak. They have been ordered, and they should be delivered around July of 2020 or in July of 2020.
In terms of the components and the critical components that are needed for the permanent fix of Burrup, that is all underway. When I talk about we are significantly confident that the plant can be permanently fixed is because the project of many months of work of the project team have identified all of the issues available, what needs to be fixed and what needs to be ordered. If there is some level when we talk about first half of 2020, and it's sort of months, it's because when everything is fixed in this plant and everything is in place, the commissioning, there's always teething problems. I've had this since I ran my first company in 2020, a power company and a new hydro project in manufacturing. You don't know if the commission is gonna last two months, three months, four months, five months.
It's not gonna be more than that. That's what's getting a little bit of, that we won't know until it's tested. Again, we're quite confident that it is permanently fixed and everything that we can do is in place and that the project team has all of the resources to do something that they know how to do because we know how to run these plants, we know how to manufacture, and we know how to fix them hence.
Okay. Is your team now running the project? Have you taken over from Yara?
The project management, we work together with Yara, and we have a very good relationship. That relationship goes with quarterly meetings or monthly meetings between the CEO of Yara and myself, weekly meetings between the head of President of Manufacturing, Carlos Duarte, and the President of Manufacturing of Yara, Tove, and then so on and forth at the level of the project team. We probably, because this is our home turf, we have offered the best people that we have available, and it has been determined by both sides that, for example, the project team should be run by this experienced Orica person. It's a joint team. It's just that we have, again, being the local, we have provided a significant number of the people who are working on repairing it.
The visibility that we have and the confidence is assured by just the quality of the team in place and the numbers. Again, we were adamant, again, 6 months ago to separate the running of the operation from the project team that was going to fix it, and that has happened as a consequence of all of these meetings. I'm just highlighting that that team is significant, 32 people, and run by an Orica guy, but it's just the best people for the job. It's a joint venture effort.
Right. Given that you've got your best people over there, you're confident that the issues at Yarwun are overcome?
Yes. It's the best project guy. Right now, it's not an operating guy. As you may know from this, the project guys and the operating guys are very different usually, or gals. He is the project guy, which we right now are not really doing any project, but it is. The manufacturing organization is a stretching thing to help. Having said that, Yarwun is a key priority, and it wouldn't be where it is if we didn't have all the resources. Yarwun has a new manager who's doing a spectacular job. On top of him, you have Greg Holmes, who did a fantastic job in Kooragang Island some years ago and is probably our senior expert in manufacturing, and then Carlos. They're all doing I have great confidence that we have the right people right now.
Thanks very much, Alberto.
Thank you. The next question comes from Daniel Kang of Citigroup. Go ahead, please.
Hi, everyone. Just wanted to ask about the volume expectation. It would take FY 2019 volume to around 3.9 million tons, which is probably your highest on record. Just thinking about that, if I include Burrup at 300,000 tons, does that suggest that your capacity is around 4.2 million, or can you stretch this further?
We can stretch it further. Right now, your numbers are right at the current OEE. We have plans in manufacturing to increase our whole manufacturing capacity. It's not easy, but it's going to take two or three years to go from average OEEs to around 88%. We do plan to, let's say, in the next years, as that demand comes in, to liberate maybe another 150,000 tons, and then we have plus the 30,000 tons in Bontang that we're already working on debottlenecking. The point that you're making is the correct one. The East Coast is right now in deficit, the East Coast, because the Yarwun plant is being. Without Burrup running, the whole Australia right now is in deficit. With Burrup coming in, there would be some level of almost supply-demand, maybe a little bit more supply than demand, but not much.
The whole market has tightened significantly, that's why we're looking to, as we look two or three years down the line, we're looking for the Bontang. We will need the Bontang, we will need to keep debottlenecking.
Thanks, Alberto. In terms of East Coast, you mentioned, can you give some color in terms of the current East Coast negotiations, coal negotiations? Do you expect the recent positive decision from the anti-dumping commissioner to have an impact in these negotiations?
Look, there's this significant contract that we have been negotiated. That's all sort of negotiated at this stage. Probably let me answer in a different way. We have seen firming prices in the last 18 months, which means that every price that we have negotiated is a bit above the previous price. There has been a systematic sort of firming of prices, it is clear that this determination of It's a preliminary determination, so we have to let it run its course. Clearly what it means is that imports have been coming into Australia at clearly dumping prices. We obviously share that view, that means that IPP import parties should have some sort of impact going forward, hence it will have impact for spot price tons and all of that.
I just want to probably reiterate, we have been seeing that firming of prices, again, we'll see how things continue. It is a preliminary determination. We were, however, happy again to have seen it. We're very supportive of it. It is the truth again, there was clear dumping from China.
How does your comment on firming of prices marry up with the guidance of a further negative price reset of AUD 25 million?
That one is the last of the contract. We flagged it last year. We had a AUD 55 million price reset last year. I actually said I'm not going to talk anymore of price resets because there's really no more price resets. This was just a contract that has been a bit difficult to end the negotiation, and it's a very large contract. Hence, it's just saying, well, look, there's no more price resets. This was something that we flagged last year. The new contracts that we've won have been mostly in the Pilbara, and that has been an issue. You would have seen the prices coming straight through, but the issue of the Burrup and the costing of that has not allowed it. In the East Coast, there was another probably thing that you didn't see.
We had lots of wins, but there was this big strike last year, which dampened sort of part of the volumes in the East Coast. There wasn't that level of increase. Let me probably point you back to the whole one area where you can see it. Chris showed you that volume growth of AUD 70 million volume mix. A lot of that is increasing volume and increasing margin is showed in that AUD 70 million. For next year, there's not major contract renegotiations. What I would tell you is we expect to see pricing passing through into the EBIT line more noticeable in 2020, 2021, 2022. It's the same thing that happened with the pricing going down. Remember, the prices really from a market went down from 2014 to 2015, which was my luck as I joined the company.
That was the big drop from 2014 to 2015. It took 2015, 2016, 2017, and 2018 to really flow through to the bottom line. This will take time to flow, but you will start seeing it.
Well, thanks for that, Alberto. Just a very quick one for Chris. Tax rate has moved up to 32% last year. What's your expectation going forward?
We expect the tax rate to remain in line with the 32%, that's driven by the reduced deductions that I spoke about, in particular on the unwind of a number of hybrid financing structures we have in place, as well as the mix of the geographies and where our income is coming from.
Thank you. Thank you, guys.
Thank you. The next question comes from Sophie Spartalis of Merrill Lynch. Go ahead, please.
Good morning, team. I just wanted to come back to Burrup and the timings around there. I'm just a little bit confused. You talked about there being parts being ordered at the moment and expected delivery in July 2020, yet you also talk about commissioning in first half 2020. Can you just maybe talk through in a little bit more detail where you expect that FY 2020 run rate to be? By the time you get to end of FY 2020, do you expect to be at 100% run rate?
I don't know if I misspoke. I thought I said July 2019. If I did, that's what I meant. Obviously, the parts take a year to make, and they were ordered some months ago, so it's July of 2019.
Okay. Just going back then to then the run rate expected in FY 2020, given that you're commissioning first half 2020.
The run rate when? I'm sorry.
At the end of FY 2020, do you expect the plant to ramp up in six months to 100%?
Yes. What the guidance has been, the plant should be within the first half of 2020, should be fully running at nameplate or close to nameplate capacity.
Okay. Just remind me, is there an insurance claim that is potentially outstanding on the performance of Burrup and the impact that it's had to Orica?
There is a performance bond of AUD 120 million that is the equivalent of a bank guarantee, that will pay for all of the capital cost of the reparations, it should be more than enough to pay for those capital costs.
Okay, great. Thank you.
Thank you. The next question is from Grant Saligari of Credit Suisse. Go ahead, please.
Thanks. Maybe just following on from the Burrup thing. Alberto, I agree with you that once Burrup's up and running in FY 2020, it's going to be a big benefit to the business. I guess conversely, if you find more problems there and the plant's not up and running at the end of FY 2019, it's going to be a huge ball and chain for the business. I guess a couple of things. I'd be interested to know what the total capital by the joint venture partners has been spent on Burrup to date. Beyond the AUD 120 million that you've just outlined, if there are further rectification problems identified that are required with Burrup, I mean, who coughs up the capital to fix that? I guess I'm just after an impression.
My impression is with the control measures you've taken, that this plant would be much better off for Orica if it was under Orica management. I wonder if there is a pathway, whether you would agree with that, and whether there's a pathway towards Orica management or, dare say, full ownership of that plant.
Just to put a timeline on things, the plant started failing, but again, nobody knew what was happening in September of last year. Initially, they said they were going to be fixed by December. When everything was dismantled around February or March, the extent of the issues were much more significant. At that time, we started sending engineers, that is about six, seven months ago from Orica. Even though, again, they run it, we couldn't just stand idle, we started sending teams of engineers to work on how to fix the plant and how to run it. Some months later, it was clear that we needed a full project team. That project team has basically been led by Orica, and that has identified, up to today, every single piece of part that needs to be repaired or changed.
The guy who is there, my understanding is he knows Bontang inside and upwards, KI inside and upwards. They know there's no technology except that it's a modular. The technology is nothing that sort of scares them. The list of things that need to be repaired is extensive, but it is also exhaustive. They have gone through every single piece. At this date, the understanding is that the AUD 120 will be more than enough to cover all of the capital costs required. Because, again, the type of analysis has been exhaustive, I think at this stage it will be just speculation to think of anything more than that. To our view, again, we know what needs to be fixed. We have ordered the critical parts. We know what it's going to cost.
More than that, we know that the money that we have is enough for that. Up to now, including the 5%, Orica's share is about AUD 800 million.
The total is AUD 1.6.
We don't know. Remember, we came in late, that negotiation, I wasn't privy, but they would have different numbers.
If the plant is not up and running at the end of fiscal 2019, is there a possibility that you would lose that additional BHP volume?
Let me remind you, we sold in 2018 in the Pilbara 240,000 tons. That's probably something that we haven't explained. We have the logistics to adequately source 240,000 tons. With the BHP and the pluses and minuses, we're going to be around 280. That means 40,000 tons more than what we did this year. That is a marginal amount that we can handle. We expect to have the plant ready, but we have the capacity to handle it if it's two or three months delayed.
Okay. Can I just ask a quick question, or hopefully it's quick, around gas into Kur-
Is that clear that we are already doing 240?
That's clear. Yeah. Thank you.
Okay.
Yeah. No, thank you. That's a full explanation on Burrup. Could I just quickly just ask about gas into Kooragang Island? I noted you commented this is the last of the previous contract step-ups that started in 2017. Can you just remind us of the duration of that current gas supply contract into Kooragang Island?
It's into 2020.
Could you give some indication as to where the current contract is relative to what we're seeing in terms of East Coast gas prices at the moment? My perception would be that currently offered gas contracts would be significantly higher than where you might be standing at the moment.
I said that our prices, because of some things that we did with the hedge and all of that, were already close to market prices, and that view hasn't changed. Probably that's still the basis. If there is something, it's going to be something that would be manageable. More importantly, if there's any issue of gas, it's for all of the competitors, so that would go into the normal rises and falls. There's a technical issue why it wasn't before, and it was because it was delinked with the petroleum hedge that made us impossible to pass that gas increase before to the contracts. Any contract that we sign now will have rises and falls with the price of gas. All in all, we are close to that price.
We are in negotiations with several, and will be for the next 12 months, but we're hopeful of reaching sort of constructive agreements with some of the larger companies.
Okay. Look, that's very helpful. Thanks for your patience.
Thank you. The next question is from Scott Ryall of Rimor Equity Research. Go ahead, please.
Thank you very much. I'll do it quick on Burrup. Alberto, you mentioned something about AUD 200 a ton, I think, that it's costing you for every ton that you can't take from Burrup and deliver into the Pilbara. Did I take that away correctly? That was about your cost.
It is the cost if we have to move it from Yarwun. We have agreements with CSBP, so that has a different cost, and we sometimes can source some from Bontang. On the margin, let's say, any additional tons that we have to move would be from Yarwun, and that's AUD 200 of freight. I wouldn't calculate it on all the tons because we have different sourcing facilities.
Sure. If you were to need to go from that run rate of 240 to 280 with the BHP contract ramping up, then you would take it from Yarwun, and it would be AUD 200 a ton.
From Bontang, but let's say yes, that would be 40,000 tons at 200 would be AUD 8 million.
Okay, great. Very helpful. Just perhaps a question for Chris. On the EBIT bridge in the first half, there was a drag of AUD 21 million from CP&E and asset sales, which has disappeared for the full year. Could you just explain to me what happened there? I'm not sure I missed it in that prepared commentary.
There was a sale that we did in the second half of a Trident sale of AUD 17 million. That's what happened. It compensated for that.
Okay, which division was that recognized in, please?
Which what?
Where was that recognized?
You're talking about the first half that it showed something versus the second half, if I understood it?
Yeah. In the second half.
Just that in the waterfall chart, there was an AUD 21 impact of asset sale that we did in the first half of 2017 that we didn't do in the first half of 2018. As we moved into the second half, we did this asset of something that we had of Kooragang Island, that sort of neutralized, that went in that waterfall chart. All in all, if you compare 2017 to 2018, the delta is about AUD 5 million in asset sales.
Yeah. Okay. You recognized that AUD 17 million in second half 2018. Is that correct?
Yes.
Okay. All right. You spent a few slides talking about the technology, and you're clearly excited from the upside, as you know I am as well. I wondered if you could talk through what do you believe is the most important technology in terms of miners thinking about their total cost of production and the productivity benefits. What is it that you're most excited about delivering to them, please?
Look, I think the holy grail of where we're heading is to automated drilling and blasting. In that regards, wireless and BlastIQ, but wireless mainly will be a key part of this. We've said it before, and you may ask BHP, but also Roy Hill. The reason why we won those contracts was only based on what they saw as the productivity improvements in technology. Let me again try to give one example that is quite exciting that could really transform mining, open-pit mining. When you do open-pit mining, you have a bench of about 10 feet or something like that, and then you're going to drill about five benches.
You have to only drill one hole and load it, then put all the cables at a time, then you blow that bench, then you do that several times, then you move bench, then you go to the second bench. You do that all over again. With wireless, what you do is that you drill a hole, and you prepare five with explosives for five benches. You put the wireless detonator, then the detonators that are on the four benches underneath are asleep. You prepare the whole sort of field with that. When you start, you blow the first bench, then you remove everything. When you go to the second bench, everything is ready. You don't have to do it again. You don't have to cable again.
You just wake up the wireless detonator and do it again. The productivity improvements of that in terms of efficiency, of speed, when we talk about productivity of 10%-15%, that is what we are talking about. That type of modus operandi will be trialed with BHP, is being trialed in other regions of the world, and it will change how they do mining. In Olympic Dam, we're also going to try it, and there the benefits are even higher in the sense that what you do is you change the mining sequence. That means that today, the mining sequence is usually determined by the last person that is exposed to the wall, to the front of the operations. When you do a wireless, you can remove people from that front of operations, and hence you support it less, you can do quicker, and all of that.
The benefits are very, very significant. What we are doing right now is proving through trials all of that, then that would move to significant deployment in 2020 and 2021 of wireless. We will be telling the market how that goes, but I expect to see in 2020 noticeable sort of EBIT and in 2021 very noticeable EBIT coming from these new technologies. That's probably the leading one. The BlastIQ truck, we can't have enough production from that truck. There's a backlog goes into 36-40 months of backlog of production. That's because they're just so much better. That's one competitive advantage that probably can be eroded within 2-3 years, but wireless is much longer than BlastIQ.
Okay, great. My last question is just back on Asia Pacific, please. If I look just at the second half results, your revenue was up 17%, your EBIT was up 9%. One of the things you're talking to going forward is operating leverage. Now you've given some quantification around the issues at Yarwun being AUD 30 million annualized. If I took AUD 16 million from that and added it to your EBIT, your EBIT growth would be about the same in the second half as your revenue growth. Is that the key for operational leverage in the Australian market? Obviously, you've been hamstrung a little bit by Burrup for the longer term, but in the next 12 months, is Yarwun improving really the critical thing for operating leverage, please?
Yes. That's a good point. Yes, if I look at the operating leverage for next year versus 2018, remember at the first half, we talk about an AUD 17 million manufacturing impact from really breakdowns in the cyanide plant and all of that we didn't have in the second half and don't expect to have in 2019. That is about AUD 17 million. Just purely improve Yarwun between 2018 and 2019 is about AUD 13 million. There's AUD 30 million of manufacturing, of just running better manufacturing between the two years that you would see in the 2019 results. Burrup, unfortunately, is still again limping on. But even if we produce that 20%, that's 60,000 tons that we would save roughly about AUD 200, so that's AUD 20 million. There's several other things that we've said in the results. Headcount, we did a significant headcount reduction.
That will have benefits in 2019, roughly about AUD 25 million. There's other things coming through. Volume is growing 100,000 tons. Longer margins from technology and mining services is also growing. The pluses are clearly significantly higher than the minuses.
Okay, great. That's why I looked at the second half. Essentially in 2019, I just want to be really clear about this, you are expecting to demonstrate operating leverage, i.e. EBIT growth higher than revenue growth?
Yes. Well, yeah, let's say around it. Still have Burrup, that's the big issue.
That's one that comes in 2020. Okay, thank you. That's all I have.
Thank you. The next question comes from John Purtell of Macquarie Group. Go ahead, please.
Good morning. Just had a couple of quick questions, Alberto. Just again on Burrup, just to understand just the language in the release. You've indicated in the divisional commentary that production at Burrup is not expected until the first half of 2020, but at the same time, you're expecting 20% utilization in 2019. Are you sort of referring, maybe it's terminology, to sort of beneficial production in the first half of 2020? Because just on the face of it, there's an inconsistency there.
The 20% is, let's say, from the average of Burrup. It's 60,000 tonnes of production of Burrup in fiscal year 2019. Yeah. That's what the 20% means. For 2020, we have not given any guidance of production of Burrup. We're just saying that it's going to be permanently fixed in H1 of 2020. That's fiscal year again.
Okay. Thank you. You've sort of indicated that the commissioning for the fixes in place in the first half of 2020, the commissioning will take sort of 2-3 months after that, or is that sort of built into the first half?
It's built in. When we talk about H1 2020, it's that it's fully running. That's the uncertainty that I said we will. The parts are arriving in July. Let's say by October, November, the plant should be running. If it takes 3 or 4 months to commission, that's what we don't know. That's the uncertainty of H1. Remember, we're talking about 15 months before that time, so we will give it more color as the timing approximates. We probably won't be able to really give you more precision until we start operating in August, September of 2019.
Okay, thank you. Just the last one, just on North America, just to clarify your outlook comments there, in terms of whether you're actually expecting earnings growth there in fiscal 2019. I do note that your EBIT growth was actually minus 1% in AUD terms there. Whether you're referring to sort of AUD or U.S. dollar there as well.
It was AUD, but again, we had the last of the headwinds of AUD 10 million there. That for that business was significant to swallow. I look more at the second half to second half, as I mentioned before. We do continue to see some growth in volumes and some growth in EBIT in 2020 in North America.
Okay, thank you.
Thank you. The next question comes from Donald Carducci of JP Morgan. Go ahead, please.
Good morning. Two quick ones from me. The first one being, should we think about corporate costs increasing into FY 2019, given no more profit from asset sales?
You're talking about the line Global Support?
The corporate cost, yes, please.
What you should expect for Global Support going forward is we won't have any benefit from asset sales, and then there's some increased costs that we have in the business. You're looking at around about AUD 60-AUD 65.
Okay, great. Thank you. You've mentioned the extra AUD 30 million in manufacturing for next year, can you explain where the remaining confidence for EBIT growth is given some of those potential offsets like, 10% higher D&A, the increased corporate cost, maybe potentially some info costs?
That's what I tried to say. There's Burrup coming in. There's 100,000 of volume coming in. There's headcount reductions that have a lower cost into next year of about AUD 25 million. Minova and Auxiliaries should return significantly better in 2019 than 2018. Then we have about AUD 20 million coming of margins from technology and mining services. Delphine could run, again, I think we've put all of the sort of pieces of the puzzle out there. Yeah, there is significant benefits coming through into the bottom line next year.
Great. Thank you.
Thank you. That is the final question from the phone, Mr. Calderon.
Thank you. Nothing from the floor. Thank you very much.