Treasurer Tom Koutsantonis rejects $200 million Nyrstar smelter blowout claim

THERE has been no cost blowout in the Nyrstar Port Pirie upgrade, the Treasurer says, and if there is, the State Government is limited to a $291 million hit.

Nyrstar lead smelter at Port Pirie SA. Picture: James Elsby

THERE has been no cost blowout in the Nyrstar Port Pirie upgrade and if there is, the State Government is limited to a $291 million hit.

The Advertiser yesterday revealed an internal report, from the project’s engineering procurement and construction managers Worley Parsons, in January forecast a cost blowout of more than $200 million, from $514 million to $750 million.

Despite this, Mr Koutsantonis and Nyrstar have again given assurances that the project is on budget and on time, the Treasurer adding that the State Government guarantee is limited to $291 million of the total investment by Nyrstar of $514 million.

“Any major changes to Nyrstar’s Port Pirie Redevelopment project’s budget would need to be communicated to Nyrstar’s shareholders,’’ Mr Koutsantonis said.

“This has not occurred because, as Nyrstar has also stated, the project is on time and on budget.’’

Mr Koutsantonis also moved to dismiss suggestions the Nyrstar deal was done to secure the support of Member for Frome Geoff Brock and form government.

“Our decision to partner with Nyrstar wasn’t about politics,’’ he said.

“It was about securing the jobs and livelihoods of the people of Port Pirie and delivering better environmental and health outcomes for the community.’’

He said the Port Pirie Redevelopment Project steering committee, chaired by Bruce Carter, meets regularly with representatives of Nyrstar who provide comprehensive and detailed updates of the project management.

Mr Brock said he also met regularly with Nyrstar representatives to be updated on the project.

“There’s never been any mention of any issues or complications out there,’’ Mr Brock said.

Budget figures prepared by Worley Parsons — a key project consultant until it was last month replaced as the procurement and construction manager for the project — show that the forecast cost for the upgrade has already reached $579 million, where the cost is “final or at least highly certain’’.

The Advertiser revealed yesterday that Worley Parsons’ forecasting suggests the upgrade could reach a total cost of $750 million.

The report was prepared to “allow the new PCM service to understand the current status of the project and key concerns going forward’’.

It recommends reducing the scope of the project to ensure it is delivered on budget.

A Nyrstar spokesman said the January 2015 internal report was not approved by Nyrstar and was materially inaccurate.

“Nyrstar confirms that all costs associated with the project are reviewed regularly, through both internal and external controls, and managed with fiscal rigour to ensure the investment remains to plan,’’ the spokesman said.

“Work undertaken on the project to date has been significant with initial engineering and construction work well advanced. Design is in its final stages and Nyrstar does not anticipate any deviation from its announced $514 million investment in Port Pirie.

“If any cost overruns do happen to occur they would ultimately be funded by Nyrstar, not by the

State.’’

The State Liberals called for the Port Pirie Transformation Project Steering Committee to appear at State Parliament’s Budget and Finance Committee to allow scrutiny over progress on the plant upgrade.

“The Economic and Finance Committee was appointed by Parliament to inquire into matters

concerned with finance and economic development,” Opposition spokesman Dan Van Holst Pellekaan said.

“I have today written to the Chair of the Economics and Finance Committee proposing that it

inquire into this matter on behalf of the Parliament.”