Speculation $600m deal over three years needed to save Glencore copper smelter
Glencore could be seeking up to $600m over three years to shore up its Queensland copper operations, as Anthony Albanese declines request to meet with the company.
Anthony Albanese has declined requests to meet with Glencore to discuss the future of its teetering Queensland copper operations that underpin about 17,000 jobs in the state’s north.
The Prime Minister has opted not to hear directly from Glencore over months of crisis talks about the future of the Mount Isa copper smelter and Townsville refinery, and tense negotiations on a joint state and federal rescue package.
Sources close to the talks suggest Glencore wants a package worth $600m over three years, and says anything less won’t allow enough time to gauge the viability of the loss-making business over the medium to longer term.
Meanwhile, Geraldine Slattery, BHP’s president in Australia and its future CEO according to a new report in the Financial Times, said the “courage and vision” needed in Queensland was missing under the LNP government. BHP decided last Wednesday it was shedding 750 jobs in its Queensland coal operations, heaping pressure on the Crisafulli government to ease the royalty burden.
BHP operates five mines in the Bowen Basin under the BMA joint venture with Japan’s Mitsubishi.
The window to save the Mount Isa smelter and refinery is closing fast, with Glencore going into overtime after previously delaying a decision until mid-September, and yet to reach agreement with the two governments on the joint rescue package.
D-Day looms sometime this week with Mr Albanese in the US and also planning to visit London and the United Arab Emirates.
Mr Albanese has left negotiations to Tim Ayres, who become a minister in May when he replaced Ed Husic in the industry portfolio. It is understood the Prime Minister and his office have pushed for Queensland to make a greater contribution to a joint rescue package.
Mr Albanese declined to respond to questions about whether he’d snubbed Glencore meeting requests or pushed for Queensland to contribute more to a proposed rescue package.
Mr Ayres also dodged those questions, but his spokesperson said the three parties were still at the negotiating table over the joint offer put to Glencore.
“We are unable to disclose the details of the offer, as discussions are commercially sensitive and ongoing,” the spokesperson said.
“The commonwealth and Queensland governments have been working very closely and effectively together throughout these discussions.
“All parties involved have approached these discussions in a disciplined way and in the public interest.”
The talks have been a source of tension between the Queensland and Albanese governments, although Premier David Crisafulli told parliament last week there was “a cigarette paper between what the federal government want to achieve and what we want to achieve”.
In July, Queensland Treasurer David Janetzki said the closure of the copper smelter and refinery would be a national disgrace and demanded the federal government come to the negotiating table with a convincing proposal to rescue the Glencore operations.
Swiss-based Glencore has said it was on track to lose $2.2bn over the next seven years. The forecast is based on a plunge in treatment and refining charges (what companies pay to have their products processed) as a result of excess global smelting capacity, largely in China and India, and a shortage of copper concentrates.
Glencore’s Mount Isa mining operation, known as MICO, closed in July, leaving it more reliant on supply from small and medium-sized copper mines in the northwest of Queensland.
Another big unknown for Glencore and the two governments is the future of the Dyno Nobel (formerly Incitec Pivot) Phosphate Hill mine and fertiliser plant.
Dyno Nobel has said it will make a call on either the sale or closure of Phosphate Hill this month. The fertiliser plant and Glencore’s copper smelter have a symbiotic relationship when it comes to making use of a sulphur dioxide gas emitted by the smelter.
Any shutdown of Phosphate Hill, which employs 500 workers, would have a detrimental impact on Glencore’s bottom line and likewise for Dyno Nobel if the smelter were to close.
The Glencore operations employ about 550 people, with lobby group Townsville Enterprise estimating 17,000 jobs are connected to the downstream copper assets.
The Commonwealth contributed the lion’s share of recent bailout package for global commodities trader Trafigura’s struggling metals smelters in Port Pirie, South Australia, and Hobart, Tasmania, albeit the sums involved were much smaller than those sought by Glencore.
The Albanese government contributed $57.5m of the $135m assistance package for Trafigura’s Nyrstar business, with $22.5m from the SA and Tasmanian governments respectively.
Glencore boss Gary Nagle and Mr Albanese have crossed swords over whether the Swiss multinational should cross-subsidise the loss-making copper operations using its profitable coalmining business.
Mr Nagle hit back after Mr Albanese suggested Mount Isa had been good to Glencore and Glencore needed to be good to Mount Isa. “Mount Isa had been good to Glencore, but I can tell you that Glencore has been very, very good to Australia for many, many years,” Mr Nagle said in August.
Originally published as Speculation $600m deal over three years needed to save Glencore copper smelter
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