Nyrstar’s Port Pirie smelter production may resume end June

Nyrstar has stopped production at its Port Pirie lead smelter in South Australia following an unplanned outage at its blast furnace, but expects a June-end restart.

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Port Pirie lead smelter owner Nyrstar expects production at the plant to restart at the end of the month, following an unplanned stoppage since May 28.

On June 10 Nyrstar released a statement on the outage at the plant, which was reported by The Advertiser on June 7.

Nyrstar said the blast furnace was intentionally shut down in May to allow the top submerged lance (TSL) furnace to re-establish an adequate stock of product TSL slag feed for the blast furnace, following an extended planned shutdown of the TSL in April.

“The blast furnace restart was unexpectedly delayed by a steam eruption in the refinery, and a failed blast furnace water jacket.

“On 5 June 2019, a failure of the TSL main process gas duct, between the Waste Heat Boiler and Evaporative Gas Cooler, required a further shutdown of the TSL for remedial work.”

“Consequently the further extended blast furnace outage now requires a partial dig out of the continuous drossing furnace, essential for treatment of all lead output from the blast furnace, as it has now fully solidified.

“It is expected that the blast furnace and TSL will restart at approximately the same time at the end of June.”

Nyrstar expects the unplanned shutdown will have a material negative impact on production at Port Pirie and underlying earnings in the second quarter but is yet to quantify the impact.

On Friday, local independent MP Geoff Brock said Nyrstar — set to be taken over by its biggest shareholder and lead customer Trafigura — had spoken to him earlier about “an issue with the blast furnace”.

“I understand it went down unexpectedly,” he said.

All 700 workers remain on site with Mr Brock saying the company had brought forward maintenance work to give furnace workers something to do in the downtime.

Mr Brock said the company, which recently completed a $600 million capital upgrade of the metal processing plant — backed $291 million debt guarantee by the State Government — was going through “teething problems”.

Nyrstar’s Port Pirie smelter. Picture: Tricia Watkinson

“This sort of a ramp up needs three to four years; they are doing it in 18 months,” he said.

Former Premier Jay Weatherill signed off on the taxpayer guarantee for the smelter’s rebuild as part of a deal with Mr Brock in 2014 that secured a minority Labor state government.

Nyrstar has declared force majeure — referring to circumstances beyond its control — and is in the process of assessing the outage.

The halt in production at the smelter, one of the largest lead processors in the world, led to a surge in global lead prices.

The Belgian-headquartered metals and mining company’s Port Pirie smelter produced 160,000 tonnes of lead metal last year.

Nyrstar is being taken over by Trafigura to avoid failure, subject to Nyrstar creditors’ approval.

It has been in financial trouble for some time and received a $US650 million lifeline from Trafigura in November to help it keep operating.

A new company called NewCo is to be created to hold the operating parts of its business, of which Trafigura will own 98 per cent.

Global chairman and chief executive of Trafigura Jeremy Weir visited Port Pirie a day before the unexpected shutdown.

Following a meeting between Mr Weir and Premier Steven Marshall and Treasurer Rob Lucas, a $43 million payment towards the state loan was “confirmed” subject to deal completion.

At the time, Mr Lucas said the payment was a sign that the company was “acting in good faith”, ahead of the implementation of a Nyrstar capital restructure aimed at overcoming recent debt issues overseas.

Trafigura is a global commodity trading company and sees the Port Pirie smelter as a long-term investment.