Mining giant Trafigura takes huge loss on smelters despite government bailout
Despite millions in government bailouts, Trafigura’s Australian smelters in South Australia and Tasmania have delivered losses so severe the company warns they’ll never reopen if closed.
Multinational commodities giant Trafigura has recorded a $363m impairment on two smelters in Australia currently being kept afloat by taxpayer funding in another blow to the Albanese government’s flagship Made in Australia policy.
The smelters at Port Pirie and Hobart have lost money ever since they were acquired by Trafigura and are part of the company’s Nyrstar Australia business.
The smelter at Port Pirie in South Australia is the only one of its kind in Australia for lead, and Nyrstar operates the country’s largest zinc smelter in Hobart.
The federal, South Australian and Tasmanian governments unveiled a $135m rescue package aimed at saving the smelters from closure for at least nine months in August.
Trafigura is currently assessing the merits of a significant rebuild needed to make the smelters viable which hinges on their ability to produce so-called critical minerals, including antimony used in military ammunition.
The latest impairment of $US241.3m for the 12 months to September 30 follows a $US296.5m writedown on the two smelters in 2024.
Commenting on the 2024-25 results, Trafigura chief executive Richard Holtum said if the smelters shut, they would never re-open.
“Smelting is absolutely critical to national security, as we’ve said before,” Mr Holtum said.
“If you dig stuff out of the ground, you have dirt. If you have a smelter, you have the refined metal and the critical minerals or metals that you need.
“So the macroeconomic conditions are not profitable for smelters. We have to make sure smelters remain operating, because once they’re gone, they’re gone.”
The $135m taxpayer-funded lifeline announced in August was intended to help Nyrstar develop plans to produce critical minerals germanium and indium at Hobart and antimony and bismuth at Port Pirie.
Industry minister Tim Ayers said at the time that the ageing Nyrstar smelters employed about 1400 workers, most of them in South Australia, and contributed $1.7bn a year to the national economy.
The Australian reported on Monday that Glencore had yet to sign off on $600m bailout package for its Mt Isa copper smelter announced by the federal and Queensland governments in October.
Meanwhile, the future of Rio Tinto’s Tomagao aluminium smelter in NSW beyond 2028 remains under a cloud based on soaring energy prices.
A Nyrstar Australia spokesman said on Wednesday that metal processing in the country faced a host of challenges.
“Smelting in Australia remains under real pressure. Ageing assets in Port Pirie and Hobart together with global policy interventions have reshaped metals markets, impacting our ability to remain competitive,” he said.
“Support from both state and federal governments is giving Nyrstar the chance to modernise and boost critical minerals production, and we will continue to work with governments on support and necessary long-term policies to grasp the critical metals opportunity in front of us.”
The latest impairment on the Australian smelters came as Trafigura reported net profit of $US2.66bn across its global businesses and underlying earnings before interest, taxes, depreciation, and amortisation of $US8.2bn.
Trafigura said the Nyrstar Australia smelting operations had run at a loss since acquisition, requiring significant cash investments by the group, and warned the outlook for the operations in their current plant configuration had “significantly deteriorated” in the 12 months to September 30.
“In our metals, minerals and bulk commodities portfolio, Nyrstar faced exceptionally challenging market conditions, with lower treatment charges, weaker prices and inflationary pressures reducing profitability,” the company said.
In the annual report, Mr Holtum said it was encouraging to see growing government recognition of the strategic importance of domestic metals processing in Australia, the US and, more recently, the European Union, in the face of “these unprecedented market conditions”.
He said the $135m lifeline from the federal, South Australian and Tasmanian governments alongside ongoing financial support from Trafigura for Port Pirie and Hobart was “helping to maintain operations while Nyrstar assesses a major rebuild of its Australian smelters and accelerates feasibility studies into expanding critical metals production”.
Soon after being promoted to chief executive of Trafigura at the start of 2025, Mr Holtum put the Australian smelters under review.
He has argued that Western governments should nationalise parts of the metals processing industry to compete with China.
“In today’s fractured, multipolar world, I would argue that uncompetitive assets ... such as Nyrstar Australia, shouldn’t be in fully private hands,” he said in March.
“Critical infrastructure and smelting capacity is a national security issue and therefore needs to probably have some sort of government ownership or significant government support for it because it is not competitive on an international basis comparing it to the Chinese smelters.”
Originally published as Mining giant Trafigura takes huge loss on smelters despite government bailout
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