$400m Hobart Nyrstar zinc works upgrade on hold

The $400m modernisation of Nyrstar’s Hobart zinc smelter has been put on hold as global economic conditions deteriorate and costs rise.

Former Prime Minister Scott Morrison visits the Nyrstar Smelter in Hobart. Picture: Adam Taylor

The $400m modernisation of Nyrstar’s Hobart zinc smelter has been put on hold as global economic conditions deteriorate and costs rise.

The construction estimates for the upgrade project planned for the 100-year-old plant have increased by $100m.

Nyrstar briefed staff and unions on the decision this week, stressing that normal operations will continue, there would be no job losses and the plant’s long-term future is secure.

The project attracted strong support from the federal government, with pre-election pledges of $50m from both major parties — as well as a promise of $20m from the state government. Those grants have not been drawn down but remain in place for when work resumes.

The plant is a major employer, energy consumer and exporter.

Planning and approvals and some site works have already been completed,

Nyrstar Hobart general manager Todd Milne said two main reasons had driven the decision.

“One is the escalation and capital cost of the project, which has grown very significantly over the last couple of years while we’ve been working through the project.

“The other one is our macroeconomic environment, which is affecting our industry, we’re not sheltered from that.

“We really just need to work through the assessments of the project to see how we can optimise things and the broader site, and look for other efficiencies.

“We’ll work through that over the coming months and also monitor market conditions once we come out of that side, we’ll have a better view of when we might be able to start up again.

“I’ve been clear with the workforce that we’re not seeking to make any changes to the workforce at all.

“It’s very much business as usual. Production-wise we’ve been having a fantastic run.”

“Of course, we’re disappointed in having to slow down but we’ve got an amazing workforce in Hobart, we’re running this old plant, but we do it well.

“The production lately has been fantastic and we’ve got a good team to do that. That’s one of the things that make it great to make zinc here in Tassie.”

Minister for Business, Industry and Resources Eric Abetz said the government was aware of the decision.

“While we are disappointed about this development, the Tasmanian Government welcomes Nyrstar’s commitment to a long-term future in the state,” he said.

“The Tasmanian Government is committed to working with Nyrstar to ensure the project can proceed and we will consider any changes to the government’s grant if required.

“We support Nyrstar’s engagement with the Australian Government to ensure the federal funding is still available for when the project is ready to commence.”

Local federal member Andrew Wilkie was briefed on the announcement on Friday.

“I share the community’s concern at the pause in the redevelopment of the Hobart zinc works,” he said.

“I’m also concerned that this decision might possibly reflect hesitation within the company about the long-term prospects for the zinc works.

“However the community can be confident that I’ll take every opportunity to press the Federal Government to keep the funding on the table for future upgrades to the zinc works.

“I can also be counted on to lobby both the Federal and Tasmanian governments to do everything in their power to ensure the ongoing viability of the zinc works.”

Mr Wilkie said his thoughts were with the Nystar workforce and their families.