The owner of the Port Pirie and Hobart smelters says its operations are losing tens of millions of dollars a month and need government help within “weeks” to stay afloat, casting a cloud over thousands of manufacturing jobs.
Nyrstar Australia, which employs more than 1,400 people across Tasmania and South Australia, is lobbying the federal and South Australian governments to provide “transitionary support” for its smelting operations.
The company says the Port Pirie lead smelter is losing tens of millions of dollars a month and will “simply not survive” in the current market, while its Hobart zinc smelter cannot operate independently of Port Pirie.
Nyrstar Australia chief executive Matt Howell said government action was needed in “weeks, not months”.
“That’s why we’re quite buoyed by the nature of the conversations that we’ve had with the Commonwealth and state.
“They recognise the seriousness, they recognise the urgency, and we’re confident we’ll get a solution.”
The renewed call for taxpayer help comes after Nyrstar’s parent company Trafigura earlier this year placed its Australian smelting assets under review, describing them as “uncompetitive” entities that “shouldn’t be in fully private hands”.
China has, according to Mr Howell, distorted the metals market by subsidising companies to purchase Australian raw materials at prices Australian smelters cannot afford.
China then subsidises the processing of those materials into metals while also placing export controls over the finished product, he said.
The issue has also put a cloud over the future of the Mount Isa copper smelter and Townsville copper refinery in Queensland.
“We have been quite clear that business as usual under the current distorted market is not an option,” Mr Howell said.
“That’s why this is a now problem. That’s why it needs urgent government transitionary support.
“Absent that market support, the business cannot be viable, and we all know what that means.”
Around 850 full-time workers are employed at the Port Pirie smelter, Mr Howell said, not accounting for hundreds more connected to the facility through contractors.
The Hobart smelter employs around 600 people, not including contractors.
Whyalla comparison looms large
The problems for Australia’s smelting industry come only months after the South Australian government and the Commonwealth committed $2.4 billion to ensure the future of the financially troubled Whyalla steelworks.
The state government regularly cited concerns about Australia’s sovereign steelmaking capacity if the Whyalla steelworks closed.
Mining giant Glencore made a pointed comparison to the $2.4 billion steelworks package in a pitch for federal government money for its Queensland copper assets.
But SA Premier Peter Malinauskas said the smelter at Port Pirie is a “completely different asset” to the Whyalla steelworks with “completely different” circumstances.
“We very much think that this country does require a sovereign smelting capability,” he said.
“That is a challenge that we’re alive and we’re in discussions with Trafigura about that at the moment.”
SA Energy and Mining Minister Tom Koutsantonis said it was not a Port Pirie issue but an “Australia smelter issue”.
“Smelters across the country are going through this because of the practices occurring in China, which is attempting to try an in-house this capability entirely in one country,” he said.
Mr Koutsantonis said he was in “regular contact” with federal Industry Minister Tim Ayres, who is “actively looking at this on behalf of the entire country”.
“This needs a national response,” he said.
The ABC contacted Mr Ayres for comment.
‘Hundreds of millions’ needed
Mr Howell said Nyrstar is willing to fund a $45 million feasibility study into redeveloping its Port Pirie smelter.
The study will take 22 months to complete, and the company needs government support over that time, he added.
“Over that period of time, absent any government support, the business would be losing many hundreds of millions of dollars because of the market distortion,” he said.
The Hobart zinc smelter also needs to be upgraded, he said.
Mr Howell said Nyrstar was “looking for a hand up, not a handout”, adding that company management has “tried everything that we can to restructure the business”.
“This is about investing in strategically important businesses that provide the necessities to modern life and for our strategic defence purposes.”