The Nyrstar zinc smelter, one of Tasmania’s largest employers located along Hobart's River Derwent, has announced plans to reduce output by 25%.
The firm is attributing the decline in market conditions and its own financial setbacks to these challenges.
Nyrstar, which has been operating in Hobart for more than 100 years, produces zinc and other by-products, including copper sulphate, cadmium, gypsum and sulphuric acid.
However, starting next month, it will decrease production by 25 percent indefinitely.
The firm stated in an announcement that this choice came after a "detailed and thorough examination," which was directly attributed to the "declining market circumstances and fiscal deficits" impacting the corporation headquartered in the Netherlands.
The statement indicated that Nyrstar’s operations in Australia remain under considerable financial strain because of various external elements such as deteriorating circumstances in raw materials markets, adverse treatment charges, and heightened expenses.
The facility utilizes roughly 550 employees, however, the firm stated that they have no immediate intentions of reducing staff positions.
It remains uncertain for how long the reduction will last, as stated by Nyrstar Hobart general manager Todd Milne, who indicated this depends on future market trends and operational circumstances.
Nyrstar Australia has a crucial part in enhancing the value of Australian metals and minerals," he stated. "We continue to look forward positively towards what lies ahead and possess the adaptability needed to increase output once operational circumstances become more favourable.
The decrease will occur in phases.
The Chamber of Commerce urges the federal government to take action.
The Tasmanian Chamber of Commerce and Industry (TCCI) welcomed Nystar's efforts to retain employees.
“I believe that moving forward, the federal government needs to demonstrate their commitment—by backing up their statements with actions since they claim to support manufacturing within Australia as well as mineral processing domestically,” stated Michael Bailey, CEO of TCCI.
He mentioned that the global zinc market was currently weak due to increased output from Chinese producers. He urged for incentives to encourage Australian mines to supply their product to domestic smelters instead.
In my opinion, companies that sell their products to international markets instead of supporting local Australian smelters should be required to pay increased royalties.
Federal Industries Minister Ed Husic was reached out to for his input.
Based on information from Nyrstar's website, the facility stands as one of the globe’s most substantial zinc smelting plants, capable of producing up to 280,000 tons annually.
According to Nyrstar's 2024 Economic Value Report, the smelter generated an economic contribution of $513 million for Tasmania, incurred a direct expenditure of $292 million, sustained approximately 1,891 full-time equivalent jobs, and supported more than 304 local enterprises.
Union claims Nyrstar is selling products at a loss.
Robert Flanagan, the secretary of the Australian Workers' Union in Tasmania, stated that it was a "challenging circumstance."
"We certainly wouldn’t have chosen for the company to be in a position where cutting back on production is needed, but global smelting capacities seem excessively high. This move is intended as a temporary measure to ensure the sustainability of our operations over time,” he stated.
He realized that the input costs had risen to such an extent that the business was essentially "selling products at a loss compared to production expenses."
"What they are doing is removing the high-cost components so that their production becomes more sustainable," he explained.
We’re delighted that no layoffs will occur in the near term.
Naturally, this doesn’t provide complete assurance, however, our hope is that by following these measures, they can secure continued job retention moving ahead.
Mr Flanagan stated that the company informed employees on Wednesday, and he believed the organization would reassess the employment status after approximately half a year.
"Essentially, it will depend on the state of the market, which is global, so we are at the mercy of market forces," he stated.
However, he mentioned that employees stayed optimistic and believed they would navigate through this challenging time and emerge victorious on the other side.
"Opportunities for smelter workers to transfer to another smelting facility in Tasmania are quite scarce, particularly in southern Tasmania where we only have one such plant," he explained.
The Tasmanian government is supporting them.
Guy Barnett, a Tasmanian government minister, stated that the authorities were in talks with Nyrstar and have not excluded the possibility of offering financial assistance.
"It’s clearly an issue, yet we’ll keep up our exceptionally robust and positive ties with Nyrstar to assist them in every feasible manner,” he stated. “We aim to offer practical and supportive actions ensuring that Nyrstar remains operational and successful moving forward.”
Here in Tasmania, they are a significant employer, and much of their resources come from the western part of the state—the crucial mining sector along with mineral processing—which actually constitutes our biggest export.
Extremely crucial, we’re supporting them fully.
In 2022, Nyrstar was awarded a $50 million grant from the federal government for updating the smelter, while an additional $20 million contribution came from the state government toward this initiative.
