Chemicals major Qenos has called in McGrathNicol as voluntary administrators
Australia’s biggest maker of plastics Qenos has called in voluntary administrators, leaving the government to ‘actively monitor’ the situation and what it means for workers and supply chains.
Chemicals major Qenos has called in voluntary administrators only a week after Prime Minister Anthony Albanese made reinvigorating Australia’s manufacturing sector a key plank of Labor’s re-election strategy.
The plastics maker runs manufacturing plants in Victoria and NSW and on Wednesday appointed McGrathNicol as voluntary administrators after its former Chinese owners, ChemChina, sold the company to property developer Logos.
The Australian understands that staff were advised of the move in meetings on Wednesday, with more than 700 jobs on the line across the company’s Victorian and NSW operations.
The collapse of Qenos looms as a significant political embarrassment for the federal government, coming less than a week after Prime Minister Anthony Albanese relaunched the governments manufacturing policy under the “Future Made in Australia” banner, promising to back Australian manufacturers with federal government support and secure “greater sovereignty over our resources and critical minerals”.
Qenos was Australia’s biggest plastics maker, but has struggled in recent years with high gas prices, and more recently from the closure of Exxon’s Altona fuel refinery which provided an important feedstock for its Melbourne manufacturing plants.
Shadow energy minister Ted O’Brien said the Qenos collapse added to the litany of manufacturing insolvencies under the current government.
“It’s revealing that in the same week the Prime Minister announces Labor’s signature ‘Future Made in Australia’ plan, another major manufacturer closes its doors and goes offshore,” he said.
“Affordable energy underpins Australian industry, Australian jobs and way of life for hard working Australians and their families, and this announcement reaffirms that this is all at risk under Labor. Manufacturing insolvencies have tripled over the past two years as Labor’s failing approach to industrial relations collides head on with its failing suite of energy policies.”
A spokesperson for industry minister Ed Husic said the government was “actively monitoring the situation – what it means for workers and potential impacts on supply chains”.
Qenos’s owner ChemChina cut a deal to sell the company to Logos earlier this year, but was forced to borrow $15m to keep the company running and stave off secured creditors as part of the deal as the company’s financial woes deepened.
The Australian understands that sale was completed relatively recently, with Qenos new owners calling in voluntary administrators.
McGrathNicols’ confirmed its appointment on Wednesday, saying the company’s new owners would be funding their work as administrators look to shut down Qenos’ Botany plant and consider the future of its Altona operations.
McGrathNicol chair Jason Preston said the funding from Qenos new owners will cover employee wages and entitlements, as well as the closure costs of Qenos Botany plant, which has been out of action since February 2023.
“The administrators will commence discussions with key partners to the Qenos business to determine the short-term future of the Altona plant,” he said.
Industry sources suggest those talks are likely to be focused on the orderly wind-down of Qenos’ Victorian business by the end of 2024, as flagged by The Australian in February, to allow customers to find alternative sources of supply rather than offering any real hope of the business’ long term survival.
A spokesman for ExxonMobile confirmed on Wednesday the oil and gas major had a contract to supply Qenos with ethane until the end of 2024 and “remained committed to the agreement”.
The Australian understands that Qenos did not make any approach to the Victorian government for assistance through its troubles, however.
Victoria’s jobs and industry minister Natalie Hutchins said the state government would “continue to engage closely with the company to try and minimise impacts to its workforce and better understand impacts on local supply chains.”
“We appreciate this is a very difficult time for the workers from Qenos’ Altona factory, following today’s announcement,” she said.
Victorian shadow energy minister David Davis said the loss of the company would be an “unmitigated disaster” given Qenos central role in the state’s manufacturing industry.
“Labor must act and ensure Qenos stays open. It cannot be allowed to follow other companies, closing its doors and leaving the state. After 10 years in power, the massive debt and taxes lumped on Victorian businesses are starting to reap a terrible toll,” he said.
Logos has not made clear their intentions for the Qenos sites, but will likely face a significant clean-up bill in both Victoria and NSW before the sites could be repurposed, even for other industrial uses.
Documents seen by The Australian show the Logos will pay to remediate Qenos’s environmental liabilities “up to a capped amount, whether or not the companies are able to recover any contribution from ChemChina”.