Melbourne: Orica (ASX: ORI) and Thales Australia, a global technology leader for the Aerospace, Transport, Defence and Security markets, have signed a 10-year contract for Thales to produce five million explosive boosters each year, in a deal that is good news for regional manufacturing.
Boosters are small explosive devices that help detonate larger charges, and are used extensively across Australia’s mining and construction industries.
The new contract with Thales will replace imported products with Australian ones, and strengthens Orica’s leading position in this market.
The order will increase manufacturing activity at the Benalla (Victoria) and Mulwala (New South Wales) facilities operated by Thales, including the establishment of a new multi-million dollar production line for the boosters, designed and built in Victoria. The boosters themselves are an advanced new product designed by Orica.
Orica CEO, Alberto Calderon, said: “The agreement with Thales will make Orica even more competitive in Australia, with better quality booster products. It will enhance security of supply for our customers, and be more efficient for Orica. Solidifying a deal with Thales, with its reputation and leadership in technology and innovation, is an excellent strategic fit for Orica. In addition, sustaining jobs in regional Australia as a result of this agreement is a very positive flow-on benefit for the broader community.”
Thales Australia CEO, Chris Jenkins, said: “At a time of ongoing economic uncertainty, this is a great result for manufacturing in regional Victoria and New South Wales.
“Not only are we increasing employment and production levels at the sites, we’re also giving a leading Australian company committed to technology and innovation the reassurance of a high quality supply chain based in this country. Credit to Orica for investing in local skills and local manufacturing.
“We would also like to thank the Department of Defence for their strong support of this initiative.”
The new contract sustains around 100 jobs. Approximately 200 people currently work at Benalla, and 400 at Mulwala.
Key Australian component suppliers will also benefit from increased annual orders from Thales as a result of the deal.