Nyrstar responded to media speculation in Australia in mid-July regarding a potential redevelopment of the company’s Port Pirie smelter in South Australia and related confidential discussions between Nyrstar and the South Australian state and Australian federal governments. Discussions are ongoing, a Nyrstar statement said; however, media reports did contain outdated information and a number of inaccuracies that Nyrstar sought to correct.
Nyrstar is in the early stages of investigating the technical and commercial merits of a potential redevelopment of the Port Pirie smelter with a view to securing a commercially attractive, long-term sustainable future both for the Port Pirie site and for the Hobart smelter in Tasmania, the company said.
The Port Pirie smelter has been in continuous operation for 106 years. It is one of the world’s largest primary lead smelting facilities and the third largest silver producer. In 2011, the plant produced 195,000 mt of lead metal, 30,000 mt of zinc metal, 4,000 mt of copper cathode, 18,563,000 troy oz of silver, and 36,000 troy oz of gold. The Hobart smelter relies on Port Pirie to treat its residue product, paragoethite.
“The industrial footprint of the Port Pirie smelter provides Nyrstar with a unique opportunity to potentially redevelop the site and transform the smelter into a state-of-the-art metals recovery facility,” the Nyrstar statement said. “A potential redevelopment would utilize technology that would enable the processing and recycling of a wide range of high-value, high-margin raw materials (including internal residues from Nyrstar’s existing global network of zinc smelters, complex lead concentrates, and e-waste) and reduce operating costs. A potential redevelopment is also expected to deliver a significantly improved environmental footprint.”
The potential redevelopment would further Nyrstar’s goal of capturing the maximum value inherent in mineral resources and further extend the company’s recent capital investments in processing capabilities that have enabled commencement of production of indium metal at its Auby smelter in France and tellurium dioxide at Port Pirie, both high-margin products that unlock further value from Nyrstar’s raw materials.
Nyrstar’s preliminary estimate of the capital cost of a potential redevelopment at Port Pirie is approximately A$350 million. The company is in preliminary discussions with state and federal governments seeking access to potential financial and non-financial support, but the outcome of these discussions cannot be predicted. Should redevelopment proceed, the related capital expenditure would be incurred over a number of years, with the significant portion of the expenditure not expected to be incurred before 2014/2015.
Any investment by Nyrstar would target returns and operating margins more similar to those of upstream mining assets than to the current smelting returns and margins of the Port Pirie smelter, Nyrstar said.