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Unexpected Port Pirie smelter shutdown lifts world lead price

Business

Port Pirie’s Nystar smelter has shut down after an unexpected outage at its blast furnace, sending world lead prices to a monthly high.

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Reuters reported Nystar overnight saying the outage at one of the world’s biggest lead smelters occurred on May 28.

It prompted the Belgium-incorporated company to declare force majeure, or unforeseeable circumstances which mean a contract can’t be fulfilled.

“We are currently in the process of assessing the outage and expect that production should resume within the coming days,” Nystar is reported as saying.

“There will be a negative impact to Nyrstar’s lead metal production due to the outage.”

Nystar’s website lists no media release about any outage at the Port Pirie smelter.

Global lead prices reportedly surged to the highest in a month upon the news.

The Port Pirie smelter produced 160,000 tonnes of lead metal last year, down 7 percent from 2017.

The shutdown comes as the company begins making principal repayments on a taxpayer-funded $291 million loan to redevelop the smelter, with Treasurer Rob Lucas using his power to approve or veto a takeover of the company as leverage in negotiations over the outstanding debt.

Trafigura, a global commodity trading giant and Nyrstar’s largest shareholder, in April revealed its intentions for a majority takeover of the zinc and lead miner.

Lucas said Trafigura needed his approval to do so, under the terms of the loan from the State Government.

“I do have to give authority in relation to a potential transfer of ownership, and that obviously been part of some of the discussions I’ve had,” he said on May 1.

“They are certainly aware that they require my approval as State Treasurer in relation to any potential change in ownership.

“Their timetable in terms of their takeover of Nyrstar is essentially in the period June to July.”

He said the people of Port Pirie could be assured that Trafigura was “at pains to reinforce the fact that in becoming the new owners of Nyrstar that Port Pirie is an important element of their potential global operation”.

He described negotiations with Nyrstar and Trafigura as positive and constructive, but said he could not yet say when the loan would be paid back.

“It’s too early for me to say anything definitive in relation to those final discussions other than they’ve been positive (and) constructive,” he said.

The State Government loan underwrote part of a $660 million redevelopment of Nyrstar’s Port Pirie operations in order to secure jobs.

Nystar last year employed 720 workers at the plant, but said in November it would cut jobs this year.

“As the transformation of the smelter includes shutting down obsolete and out-dated equipment, we will reduce positions at Port Pirie by approximately 120 employees and contractors in 2019,” the company said.

“We will ensure if additional requirements are added to a role that they will be able to be performed successfully keeping safety as our number one priority.”

Nystar could not be contacted for comment this morning.

– with AAP

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