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Nyrstar smelter back online under new ownership as Govt inks loan guarantee

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Nyrstar’s Port Pirie smelter has resumed full production for the first time since an unplanned outage shut it down two months ago, as the State Government approved the plant’s new ownership after demanding compulsory repayments of a $291 million taxpayer-funded loan by 2022.

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Nyrstar today confirmed that the smelter was now operating normally for the first time since the blast furnace was disabled on May 28.

The company said earlier this month it had lost production of 30,000 tonnes of lead metal.

After the unplanned shutdown, Belgian-headquartered Nyrstar declared force majeure, or unforeseeable circumstances which mean a contract can’t be fulfilled, but said it expected production to resume within days.

The shutdown came as the company began making principal repayments on a taxpayer loan to underwrite part of the ageing smelter’s redevelopment, 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 on May 1 that Trafigura needed his approval to do so, under the terms of the loan from the State Government.

Today, Lucas said the Marshall Government had approved Trafigura’s takeover, after striking a deal which would “secure compulsory repayment of the remaining monies owed” under the taxpayer loan.

Lucas said Nyrstar Port Pirie paid $29.125 million in May, and had now agreed to repay $58.25 million in deferred payments which were originally due in May and September last year.

He said that left an outstanding balance of $203.875 million, which would be repaid in seven half-yearly instalments of $29.125 million between November 2019 and November 2022, when the loan matured.

Lucas said cabinet had authorised him to approve Trafigura taking over as majority owner – which came into effect in Europe overnight – after Nyrstar Port Pirie converted perpetual securities to guarantee secured debt.

He said it was a “great outcome for the good people of Port Pirie, the smelter’s employees and their families, and the taxpayers of South Australia’’.

“After months of constructive discussion and negotiation, we now have a clear path forward for the strong future of the Port Pirie smelter under the new ownership of one of the world’s leading global commodity trading companies, Trafigura,’’ he said.

“This week, I gave my consent to Nyrstar’s capital restructure which overwhelmingly strengthens the State’s position by providing much greater certainty over the repayment of the loan.

“As one of the world’s largest traders in metals and oil, Singapore-based Trafigura – Nyrstar’s largest shareholder – acknowledged the critical importance of the Port Pirie smelter to the company’s ongoing operations.

“When the Premier and I met Trafigura’s Executive Chairman and CEO, Mr Jeremy Weir, in May, he reassured us he saw the Port Pirie smelter as an important long-term investment.

“We look forward to a positive ongoing relationship with Trafigura.”

Lucas said that under the financing arrangement, the State Government has agreed to amend certain terms including changes to its guarantee fee allowing Nyrstar Port Pirie (NPP) to hold a lower minimum cash balance, and also changes to the closure indemnity provisions.

Nyrstar last year employed 720 workers at the plant, but said in November it would cut about 120 staff and contractor positions this year.

-with AAP

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