Deals to prop up key smelters and protect jobs

Rescue packages aim to save three smelters across two states – and boost Australia’s sovereign critical metals capacity.

The Nyrstar Hobart zinc works in Tasmania.

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Taxpayer-assisted rescue plans are being finalised for three troubled smelters across two states, with $135m to save two Nyrstar plants and a lifeline for Australia’s only manganese smelter.

Sources told The Australian Nyrstar had accepted, in principle, a $135m package from the Albanese, Tasmanian and South Australian governments to secure the future of its Hobart zinc and Port Pirie lead smelters.

As well, the federal and Tasmanian governments are understood to be in discussion with US vulture fund White Oak, which holds security over the Liberty Bell Bay manganese smelter in Tasmania’s north.

Talks have focused on White Oak taking the smelter, owned by Sanjeev Gupta’s GFG Alliance, into administration, after which the governments would assist it to source fresh ore shipments to resume production.

It is understood the three governments put a $135m package to Nyrstar, whose management considered it on Monday night and endorsed it subject to further talks on detailed terms.

That may delay an announcement for several days.

The Tasmanian Liberal government – facing a tight state election on Saturday – is understood to hope it will come before the poll, but all parties have agreed not to rush it.

Nyrstar has pitched its ­capacity, with upgrades, to adapt to produce five critical minerals – antimony, bismuth, tellurium, germanium and indium – which are vital for defence, clean energy and hi-tech products.

Its parent company, Singapore-based multinational Trafigura, has warned that without government assistance the smelters are “touch and go” financially, in the face of Chinese subsidies and price manipulation.

Anthony Albanese last week committed to a rescue package for both smelters, describing them as “really important for our national interest”.

The Nyrstar lead smelter at Port Pirie in South Australia.

“Metals processing in Australia faces a significant challenge from the impact of global policy settings,” a spokesman said.

“This challenge also presents an opportunity for Nyrstar’s operations in both Hobart and Port Pirie to evolve to produce a range of critical metals.

“We remain in discussions with state and federal governments and will evaluate all proposals for support to enable a sustainable future for our operations and our people.”

Federal independent MP Andrew Wilkie, who has lobbied the government to assist the zinc smelter, which is in his electorate of Clark, welcomed the apparent in-principle agreement.

“I’m delighted that Nyrstar and the commonwealth seem to be close to finalising a deal – the zinc works in Hobart is simply too important an economic and social driver for the city to lose it,” Mr Wilkie said.

“Also, Australia needs to process and manufacture things. If we start losing our minerals processing sector, then that’s a setback for our economy.

“Both the Hobart zinc works and Port Pirie’s potential role in critical minerals processing is a very significant national security matter.”

The federal government is understood to have been more reluctant to provide support to GFG for Liberty Bell Bay, due to concerns about the company’s financial position and recent controversies. However, White Oak intervention to take control of the manganese smelter would overcome this barrier, allowing the governments to provide a loan facility or other support for an ore shipment to restore production.

Liberty Bell Bay employs about 250 people and is regarded as a viable smelter, but there have been concerns GFG has lacked sufficient operating capital to source ore supply agreements.

A Liberty spokeswoman said the the company “continues to work with the ... governments to find solutions that prioritise workers and ensures ongoing production”.

“LBB is finalising contractual commitments on the next shipment of ore and employees are back onsite undertaking maintenance, engineering and preparatory work ahead of that delivery,” she said.