Manufacturer of explosives chemicals for the mining industry Incitec Pivot (ASX:IPL) announced it will cease to be the contracted supplier for the Roy Hill iron ore mine in the Pilbara region in Western Australia, estimated to have approximately an $81 million impact until FY22.
The company will cease to supply explosives products and services due to the expiry of its current contract with the mine.
The loss of the contract is estimated to have a one-off impact on net profit after tax (NPAT) of approximately $5 million in FY18.
It is also estimated to have a $16 million loss in FY19, a $22 million impact in FY20, $18 million in FY21 and $20 million in FY22.
The company said there is minimal impact beyond FY22 and stated the impacts may be able to be mitigated to some extent by new commercial arrangements.
Shares in Incitec Pivot (ASX:IPL) closed 1.53 per cent lower yesterday at 3.86.