Port Pirie smelter owner Nyrstar to be taken over by major shareholder Trafigura to avoid insolvency

A rescue plan involving Nyrstar, the owner of the Port Pirie smelter, being taken over by its biggest shareholder is “fantastic news” for the local community.

• $900 million bailout for Nyrstar
• Nyrstar at risk of defaulting on on its $290m debt

A rescue plan involving Nyrstar, the owner of the Port Pirie smelter, being taken over by its biggest shareholder is “fantastic news” for the local community, Frome MP Geoff Brock says.

Nyrstar, which owns the Port Pirie smelter, looks set to be taken over by its major shareholder and debt holder Trafigura to avoid the failure of the Belgium-based company. The new owner of the smelter is on a much stronger financial footing than the struggling Nyrstar, with $US53.8 billion in assets across commodities trading and production.

The deal still needs to be signed off by Nyrstar's creditors, and the fate of the $290 million in debt guaranteed by the State Government remains to be seen, with that money used to upgrade the smelter.

The Nyrstar-owned smelter in Port Pirie. Picture: Matt Loxton

The State Government is in a strong bargaining position though, with its agreement with Nyrstar giving it a veto for any “change of control” of the company.

Mr Brock said the smelter was a “world class” operation which would be an asset for any owner, but the uncertainty over Nyrstar’s financial future had been a cloud over the economy of the city.

“The uncertainty hasn’t been good for our community, but this here is welcome news,’’ he said.

Mr Brock said Trafigura had been buying lead from the smelter for 20-25 years so knew the asset well.

Nyrstar has been in financial trouble for some time. Trafigura threw it a $US650 million lifeline in November to help it keep operating. Nyrstar will now create a company called NewCo, to hold the operating parts of its business, of which Trafigura will own 98 per cent. The deal is not a fait accompli with the holders of the company’s debt needing to agree to it. Nyrstar has warned a failure to strike such a deal could be a fatal blow.

Union members leave a meeting at Nyrstar in Port Pirie late last year. Picture: Tom Huntley

“Failure to implement the recapitalisation terms is highly likely to lead to the insolvency of the company and the group, which is anticipated to result in material harm to the group’s customers, suppliers and 4100 employees, very substantial loss of value to the financial stakeholders, and a total loss to shareholders’’.

Treasurer Rob Lucas said he had spoken to Trafigura’s chief executive Jeremy Weir, who reaffirmed the importance of Port Pirie to his firm’s global operations.

“I sought – and received – his commitment to ongoing constructive talks regarding the repayment of our taxpayer-guaranteed $291.25 million loan for the Port Pirie smelter operations,’’ Mr Lucas said.

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