Sun Metals zinc refinery, Korea Zinc in $1.5b ‘hostile takeover’ threatening Townsville jobs

Nearly 1000 jobs and billions of dollars of investment are at risk if a hostile foreign takeover bid for Townsville’s Sun Metals zinc refinery is successful, with leaders worried about another Queensland Nickel-style collapse.

Townsville MP Scott Stewart, former premier Annastacia Palaszczuk, Sun Metals CEO Yun Choi and Thuringowa MP Aaron Harper tour Sun Metals solar farm in Townsville.

Nearly 1000 jobs and billions of dollars of proposed investment are at risk if a hostile foreign takeover bid for Townsville’s Sun Metals zinc refinery is successful, with leaders worried about another Queensland Nickel-style collapse.

South Korean zinc producer Young Poong and private equity fund MBK Partners has launched a $1.5 billion tender offer for shares in Korea Zinc, the owner of Sun Metals and its sister company Ark Energy.

If the offer is successful, MBK Partners and Young Poong would control a 40% stake in the firm.

Sun Metals chief financial officer and Ark Energy chief executive Michael Choi told the Bulletin it was “seriously concerning”, with a change in ownership undoing the decades of work the companies have put into safety standards and their move towards renewables and hydrogen.

Ark Energy owns a huge suite of renewable energy projects across Queensland, NSW and Tasmania, with a combined generation capacity of nearly nine gigawatts.

The green hydrogen refuelling station at SunHQ's Hydrogen Hub at the Sun Metals Green Industrial Precinct in Townsville.

Its SunHQ Hydrogen Hub in Townsville is part of a $455 million expansion project, with its solar and wind farms across the country meaning they’d be “able to achieve 100% renewable energy pretty soon” — something private equity firms have “no interest” in.

“(A private equity firm) will do a whole restructure to maximise profits in a short period of time like they have always done,” Mr Choi explained.

“They’ll cut jobs and cut costs to maximise dividend to the major shareholders.

“Ark Energy is a leader in green hydrogen sector and all these investments will be stopped if this happens. Our politicians should be asking the Korean Government, are you going to just let this happen?”

Government urged to step in

Townsville Enterprise CEO Claudia Brumme-Smith called on the Australian Government and the Foreign Investment Review Board to “step in” and block the bid.

“We know that any changes to Sun Metals are also likely to impact sister companies Ark Energy, Townsville Logistics and Townsville Marine Logistics,” Ms Brumme-Smith said.

“It is critical that all local jobs across these companies are protected and that the Federal Government leans in to also safeguard the proposed $10bn green energy investment pipeline for Ark Energy and this region.”

Ms Brumme-Smith said Townsville “still bears the scars” from Clive Palmer’s Queensland Nickel collapse, which left a lasting impact on North Queensland.

“The job losses associated with this in 2016 has taken years to recover, and that’s why it’s vital that any takeover protects the livelihoods and economic stability of the communities involved,” she said.

“Sun Metals supports over 450 local jobs and, over the last three decades, has injected more than $8 billion in wages into this community.”

Townsville Enterprise CEO Claudia Brumme-Smith. Picture: Shae Beplate.

She said along with its sister companies, Sun Metals employed close to 1000 Australian workers in Queensland.

“The economic contributions, the company’s innovative approach, and its longstanding support for our local community cannot be overstated and should not be underestimated.

“We hope that the Queensland Treasurer and Trade Minister Cameron Dick is engaged with his Korean counterpart to ensure that these changes do not impact project investment in Townsville.”

Mr Dick told the Bulletin he had spoken to Federal Treasurer Jim Chalmers and “will work with him to look at any potential takeover and its consequences for Townsville”.

“I want to ensure that we protect jobs and investment in Townsville,” Mr Dick said.

“I have activated Trade and Investment Queensland to engage with the Republic of Korea Consul General in Queensland to make sure he knows the importance of Sun Metals’ operations.”

‘Hands off our assets’: Katter

Federal Member for Kennedy Bob Katter said it was “simply not acceptable” that foreign investors can buy or sell our critical assets “without scrutiny”.

“Korea Zinc has been a positive player in North Queensland for over two decades. They’ve built strong relationships with their workforce and the local community and have never taken a dividend out of Australia,” Mr Katter said.

“However, history shows us what happens when multinational corporations are focused solely on profits, like Xstrata and Glencore, they replace owners that have social responsibility and start stripping the cash out. We saw it in Mount Isa, and I’m certain the same disaster could occur here.”

Mr Katter said he would make the Prime Minister aware of the situation and would insist the Foreign Investment Review Board intervene if there was a change of hands.

Bob Katter says a foreign takeover of Sun Metals would be “disastrous” for North Queensland. Picture: Nigel Hallett

As one of North Queensland’s largest employers, Mr Katter fears the takeover could have disastrous consequences for local jobs and Australia’s control over its critical resources.

“Allowing foreign bankers — who know nothing about mineral processing — to take over is like unleashing a bull in a China shop,” he said.

“The real question on the minds of Australians is, ‘Do we still control our own country, or are we just a playground for foreign moneymakers?’”

‘Terrifying track record’

Former Townsville mayor Jenny Hill — who saw the region through the QNI collapse in 2016 — said she was “shocked” to learn of the takeover bid by the Korean company which has a “frankly terrifying” record of unsafe work practices.

“Just last month, the Young Poong CEO and another senior executive from the company were arrested after a series of workplace injuries and fatalities related to safety failures at their sites,” Ms Hill said.

“This year alone there have been three deaths due to lethal gas exposure and heatstroke.

“It is frankly terrifying to think an outfit like this might gain control of any Australian company, let alone the Sun Metal refinery, which has been employing Townsville locals and contributing to the local community since 1996.”

Originally published as Sun Metals zinc refinery, Korea Zinc in $1.5b ‘hostile takeover’ threatening Townsville jobs