Further cloud over Nyrstar’s Hobart smelter

The Australian operation of Nyrstar, who employs hundreds of Tasmanians at its Lutana plant, has been described as ‘uncompetitive’ and hints it could close without a lifeline.

Nyrstar Hobart is a zinc smelter in Hobart, Tasmania. Pic supplied, October 2022.

The CEO of Nyrstar’s parent company has described the company’s Australian operation as “uncompetitive” and has hinted it could potentially close or be sold without increased government support.

Nyrstar recently announced a 25 per cent cut to production at its 106-year-old Lutana works, which employ 500 people and put a $400m modernisation of its electrolytic cell house on hold.

No jobs have yet been lost.

The new CEO of Nyrstar’s parent company Trafigura, Richard Holtum, has told the Financial Times Commodities Global Summit in Lausanne, Switzerland that Australian governments may need to take an equity stake in order to ensure the company’s continued viability.

Mr Holtum described reducing dependence on Chinese critical mineral exports as “a national security issue”.

“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.

“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.”

He said Trafigura was negotiating with governments over the future of the facility.

“If I was Australia, I would be very hesitant about this smelting capacity shutting down,” he said.

Nyrstar has written down the value of its Hobart and Port Pirie smelters by a combined sum of more than $US500m over the past two years amid “continuing challenges”.

Trafigura on Monday axed a $750m green hydrogen plant planned for South Australia because of rising costs and weak demand.

Nyrstar Australia said support for its smelting operations was vital.

“Trafigura’s CEO made an important point in emphasising the severity of the challenges facing Nyrstar’s Australian assets and the global smelting industry,” the company said in a statement.

“Government support is essential in improving the competitiveness of multi-metals smelting in Australia, in order for it to deliver the long-term benefits and product that Australia and the world need.

“Smelting is and should be considered critical infrastructure.

“Nyrstar has and continues to engage with state and federal governments in Australia about the severity of the challenges it faces and the potential solutions.”

Originally published as Further cloud over Nyrstar’s Hobart smelter