MELBOURNE (Reuters) - Orica Ltd, the world’s largest maker of commercial explosives, is set to increase environmental provisions by A$114.7 million ($86 million) to cover the costs of cleaning up groundwater at its Botany site near Sydney, Australia’s corporate watchdog said in a statement on Thursday.
A spokeswoman for Orica said the figure disclosed by the regulator would be part of a total of about A$300 million worth of provisions and impairments that the company said in March would be booked in its half-year earnings.
Orica, with a market capitalization of close to A$7.5 billion, is due to report its half-year results on May 7.
“ASIC (Australian Securities and Investments Commission) notes the decision by Orica on 7 May, 2018 to increase the amount of its environmental provision by A$114.7 million in its financial report for the half-year ended 31 March, 2018,” the regulator said in a statement.
The regulator said it had earlier raised concerns that Orica had not set aside enough funds for improving water quality at Botany Industrial Park, where Orica previously had operations that contaminated the soil and groundwater.
The company had total environmental and decommissioning provisions of A$215.5 million as of the end of September 2017, according to its most recent annual report.
Orica’s shares dropped after the announcement to trade down 1.8 percent in a broader market that was up 0.7 percent.
Reporting by Sonali Paul; Editing by Kenneth Maxwell