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Background

Recent international breaches of security including the events of September 11 2001 and the Bali and Australian Embassy in Jakarta bombings have increased the awareness of national security. As part of this awareness the Council of Australian Governments (COAG) has developed principles regarding the use, manufacture, storage, transport, supply, import and export of security sensitive ammonium nitrate (SSAN).

Various States and Territories around Australia are currently working on adopting these principles through legislative changes. The intent of these changes is to limit SSAN access to only those who are authorised to use, manufacture, store, transport, supply, import and export this material; thereby mitigating the risk of a significant terrorist event occurring in Australia.

Given these impending changes, the operating environment and risk profile of the mining and construction industry has permanently changed. With the tightening security environment around SSAN, and likely flow through to traditional explosives, Orica is responding in a number of ways. Click here to see Orica’s response. Orica believes that as an industry, the mining and construction sector needs to take a leadership role in diligently managing the handling of SSAN. It is therefore a key requirement that our customers are also committed to complying with the regulatory changes.

COAG Principles
The Council of Australian Government (COAG) agreed on a national approach to ban access to security sensitive ammonium nitrate (SSAN) for other than specifically authorised users. The agreement will result in the establishment in each State and Territory a licensing regime for the use, manufacture, storage, transport, supply, import and export of SSAN. The aim of the licensing regime is to ensure that SSAN is only accessible to persons who have demonstrated a legitimate need for the product, are not of security concern and will store and handle the product safely and securely.

Orica operates across the complete supply chain spectrum for SSAN (ie use, manufacture, storage, transport, supply, import and export) hence the COAG Principles have a very significant impact on Orica Mining Service's operations throughout Australia.

The COAG "Principles for the Regulation of Ammonium Nitrate" can be found at: www.coag.gov.au/meetings/250604/attachments_d.pdf


What is SSAN and how will COAG Principles impact?
Under the COAG principles, all ammonium nitrate, ammonium nitrate emulsions and ammonium nitrate mixtures containing greater than 45% ammonium nitrate (excluding Class 1 products and aqueous solutions) have been designated as security sensitive ammonium nitrate (SSAN) and so will be subject to the COAG Principles and resultant legislative changes.

Based on this definition, Orica's Ammonium Nitrate Prill and all Emulsion products are SSAN and each product will need to conform with the COAG principles and legislative requirements enacted in each State and Territory.

State Implementation
Queensland
Queensland enacted legislation regulating the use manufacture, storage, transport, supply, import and export of SSAN on the 1st November 2004. Under these legislative changes there is a transition period whereby affected stakeholders have until 30 June 2005 to comply with the new regulations.

Other States and Territories
The other States and Territories are in various stages of drafting their legislative changes.

Links to the website of the relevant Government entity responsible for the regulation of SSAN in each State and Territory are set out below:

New South Wales

Victoria

WorkCover Assistance Service
Phone 131 050
Website: www.workcover.nsw.gov.au  

Dangerous Goods Unit - WorkSafe Victoria
Phone 03 9641 1555
Website www.workcover.vic.gov.au

Queensland

Western Australia

Department of Natural Resources and Mines
Phone 07 3237 1386
Main Website www.nrm.qld.gov.au/mines/explosives

SSAN information website: www.nrm.qld.gov.au/mines/explosives/ammonium_nitrate.html

Safety, Health and Environment Division - Department of Industry and Resources
Phone 08-9222 3413
Website www.doir.wa.gov.au

South Australia

Tasmania

Workplace Services - Department for Administrative and Information Services
Phone (08) 8303 0400
Website www.Eric.sa.gov.au

Workplace Standards Tasmania
Phone: 03 6233 7657
Website www.tas.gov.au

Northern Territory

 Australian Capital Territory

NTWorkSafe
Phone 1800 019 115
Website www.worksafe.nt.gov.au

Dangerous Substances, Gas and Plant WorkCover
Phone 6205 0200

 



Inconsistency and Implications Orica’s objective is to assist our customers in achieving a smooth and uninterrupted transition to the changing regulatory and operating environment. However, Orica considers this process is hampered by the absence of uniform progress among the States and Territories in implementing legislative changes. Orica also anticipates that the cost of compliance is likely to be higher if there is a lack of consistency nationally in the SSAN regulations.

Orica’s Response
A key focus for the COAG Principles is the ability to monitor SSAN in the supply chain. This will necessitate stricter management of points of change of custody of SSAN by Orica. Greater emphasis will also be placed on the accuracy of inventory management and reconciliation processes. There is no immediate change in Orica’s product configuration or breadth of services.

Orica anticipates that there are going to be price implications related to the new operating procedures adopted by Orica as a result of the regulatory changes. A determination regarding changes to commercial pricing arrangements will be made as Orica develops a greater understanding of the total costs and risk profile associated with the regulatory changes.

Orica’s initial SSAN compliance implementation Orica's initial actions are specifically directed at compliance with the Queensland legislation as Queensland is the first State to implement SSAN regulations.

Orica has carried out or is currently in the process of completing the following actions:

·      Appointed a dedicated team to implement the requirements of SSAN regulation.

·      Applying for the licences required to use, manufacture, store, transport, supply, import and export SSAN.

·      Revised the company Human Resources processes mandating that all employees have or obtain security clearances (Note: checking of individuals is underway).

·      Revised the Orica Enterprise Resource Planning (ERP) process and procedures to enhance traceability in the SSAN chain of custody.

·      Undertaking physical security changes to conform to Queensland regulations.

·      Orica's response to the changing regulatory environment involves investment in capital, systems and processes and supporting significant increases in the number of transactions required to meet the minimum regulatory requirements around the SSAN supply chain.

Longer Term Development
Orica expects that there will be continued change in the security environment as each of the States and Territories implement their legislative changes. Orica’s long term response to these changes will be driven by:

·      areas of consistency and inconsistency between State regulation;

·      development of the regulatory framework as it emerges;

·      the application of legislation to other products;

·      development of technology solutions and the cost of implementing such solutions; and

·      the evolving risk environment.

Orica has programs in place to address these drivers and expects to work with customers and industry forums to develop operating models to improve security and efficiency.