Gupta’s Liberty Bell Bay smelter pauses production, as Labor demands answers and Libs plead for help

A production shutdown at a major manganese smelter has prompted Labor to demand ‘transparency’ from Sanjeev Gupta’s GFG Alliance, just months after its Whyalla steel works entered administration.

Liberty Bell Bay’s manganese alloy smelter, near George Town in Tasmania. Picture: Pool/ABC

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Major Australian manganese alloy smelter Liberty Bell Bay, owned by Sanjeev Gupta, is “pausing” production, creating fears for 250 workers and energy prices in Tasmania, amid calls for federal intervention.

A spokeswoman for the company – owned by British businessman Sanjeev Gupta’s GFG Alliance – primarily blamed “ongoing challenges with ore supply” for the “period of limited operations”, which the Tasmanian government described as a “production pause”.

“LBB lost its main ore supplier last year due to Tropical Cyclone Megan, which caused extensive damage to South32’s (Northern Territory) GEMCO (manganese ore mine) … placing pressure on inventory and working capital,” the spokeswoman said.

“We are still working through ore supply options at present. Price volatility globally and the imposition of tariffs in the US have also impacted operations.”

Liberty Bell Bay’s manganese alloy smelter, near George Town, Tasmania. Picture: Pool/ABC

It is understood there are no immediate forced redundancies planned, with the company asking employees to take leave.

However, management did not say how much if any production would continue at Bell Bay, nor how long any pause would last.

As the Liberal state government called for federal assistance, claiming the plant was of “national strategic importance”, the Albanese government and state Labor opposition cast doubt on the company’s statements.

“It would be a mistake to characterise this as just being about the availability of ore,” said state Labor leader Dean Winter. “We have been monitoring this situation for months, as GFG Group’s Whyalla operations went into administration and the group’s global finances came under more pressure.

 “There are questions about whether the company will have enough working capital to place another order for more ore even if it becomes available. We therefore hold grave concerns for its long term future.”

The smelter, south of George Town in Tasmania’s north, last faced an uncertain future when owned by South32, before being purchased by GFG in 2020.

GFG’s Whyalla steel works in South Australia were in February forced into administration by the state government, with significant debts.

Federal Industry Minister Tim Ayres demanded more transparency from the company.

“The Australian government – and the Tasmanian government, local staff, unions and affected communities – need much more transparency about the state of the business and the decision to halt operations,” Senator Ayres said.

“I urge GFG Alliance to step up and deliver confidence and certainty in the ongoing operations of this facility..... I also urge them to provide sufficient support so that the smelter can continue processing ore...

“I have asked my department to establish a rapid assessment team to work with the Tasmanian government to analyse the facility’s commercial position comprehensively and to provide both governments with advice over coming days.”

Liberty Bell Bay accounts for an estimated 7 per cent of Tasmania’s power consumption and is also one of the state’s largest natural gas users.

Goanna Energy analyst Marc White said the smelter carried about $10m a year of energy network costs, which in its absence would be passed on to all Tasmanian power consumers.

That cost could be far higher if new energy stabilisation infrastructure was needed to be built to compensate for the loss of production at Liberty, and at the Hobart zinc works.

Mr White said gas prices could also rise for the remaining users of a gas pipeline from Victoria.

The ferro manganese and silicomanganese producer, previously known as Temco, has been operating since 1960, and spruiks itself as “one of the world’s greenest ferro alloy producers” due to its use of hydro power.

It is the only commercial ferroalloy operation in Australia and one of the largest globally.

Tasmanian Industry Minister Eric Abetz flagged the need for federal help but said the state government was mobilising support services for workers, their families and the local community. “Production out of Liberty Bell Bay is of national strategic importance,” he said.

Liberty Bell Bay’s manganese alloy smelter. Picture: Pool/ABC