Redevelopment lifeline for key smelter

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 21 Jan 2016   Posted by admin


By Reuben Adams

THE Port Pirie smelter once faced an uncertain future, but a $563 million redevelopment is set to give the South Australian institution and its namesake town a new lease on life.

The Port Pirie smelter has been in constant operation on the eastern shore of the Upper Spencer Gulf for an incredible 125 years.

The histories of the smelter and the town are inextricably linked; the discovery of silver, lead and zinc at Broken Hill in 1883 facilitated the development of a railway connecting it with Port Pirie in 1888, and the subsequent construction of a lead smelter in 1889 to treat Broken Hill ore.

Broken Hill Proprietary began constructing its own smelter from 1892, which was soon acquired by a major joint venture of Broken Hill-based companies, Broken Hill Associated Smelters. By 1934, Port Pirie boasted the largest lead smelter in the world.

Still the largest lead smelter and refinery in the southern hemisphere, the operation is now owned by European major Nyrstar, which employed more than 5500 people across its portfolio of operations in Europe, the Americas, China and Australia.

In South Australia, Nyrstar’s operations generate more than 2500 direct and indirect jobs, contribute more than $304 million a year to the state’s economy and $840 million in exports.

The redevelopment

In 2013, poor operating performance and the need for substantial investments to reduce highly toxic lead emissions placed the future of the smelter – and by extension the township – in limbo.

That year, Nyrstar penned an agreement with the state and federal governments to investigate the conversion of the lead smelter into an advanced metals recovery and refining facility.

The flexibility to treat a range of other metal bearing feed material would allow the operation to benefit from significant economies of scale.

This redevelopment would enable the smelter to process an array of low grade feed materials to extract valuable metals, and move beyond the production of only lead.  Importantly, it would see a drastic reduction in the smelter’s toxic lead emissions.

Nyrstar progressed the final investment case during 2013, with detailed engineering studies and a pre-feasibility study. The result of the review found that the smelter’s redevelopment into a modern, advanced metals recovery centre represented a “compelling business case”.

In May 2014 South Australian Premier Jay Weatherall signed off on the $514 million project, which would include a $291 million investment by the state. By October, Nyrstar had locked in the final part of a complex financing package.

This financing put Nyrstar on schedule to commission the plant in the second half of 2016.

Smelting operations at Port Pirie.

Smelting operations at Port Pirie.

Progress

Momentum at the Port Pirie Smelter Transformation project, expected to generate significant economic, environmental and social benefits for the state, continued to build in 2015 and a number of significant milestones were achieved.?

In September 2015 the centrepiece 150 tonne furnace – designed to significantly reduce lead emissions – arrived on site. Installation of the furnace shell, which required foundations 26m deep, were carried out at the Nyrstar site across the following few months.

State Treasurer and Development minister Tom Koutsantonis said he was confident the Government’s $291 million investment would pay off and would help regenerate the town of Port Pirie.

“The risk to the taxpayer is exceptionally small and, quite frankly, this is an example of the Government using its balance sheet to go and leverage private investment,” he said.

“A town of over 10,000 people would have been in dire straits if we and [Member for Frome ] Geoff Brock hadn’t decided to redevelop the Nyrstar smelter.

“We’re very confident that it can be completed but of course, you know, things can happen, but as it currently stands, we’re very, very confident it can be completed on time.”

In October, a combination of unfavourable foreign exchange rates and additional engineering work increased redevelopment costs by about 10 per cent; Nystar announced that despite this, the project remained on schedule.

The company stated work on the site was “progressing well with all piling for the furnace, acid plant and oxygen plant completed and pile caps and foundations being close to complete”.

“The Port Pirie Redevelopment costs at completion are currently forecast to be $563 million,” the company stated.

“The increased cost of $49 million largely results from adverse foreign exchange impacts and additional engineering and project management services required.”

In December, Nyrstar Port Pirie Smelter vice president metals refining Bertus de Villiers told the ABC that development remained on schedule.

“The contractor numbers are slowly ramping up as activities increase on site,” he said.

“At the moment I estimate roughly about 200 people are living in the accommodation camp specifically developed for the redevelopment contractors.

“The contractor numbers will peak at around 500 between February and April next year.”

Nyrstar reached the final key funding milestone for the Port Pirie Redevelopment in December, and commenced draw-down under the $291 million funding structure supported by the South Australian Government and Australia’s export credit agency, the Export Finance and Insurance Corporation (Efic).

Mr Brock said he was delighted that Nyrstar and the state government had signed off on the documents to secure the future of Port Pirie.

“Like many other members of the Port Pirie community, I’ve been following closely the progress being made at the Nyrstar plant during 2015,” he said.

“With the concrete poured, the foundations in place and the modules beginning to arrive, an excitement is building toward the final stages of this huge investment in Port Pirie’s future.

“Now the state government has finalised its guarantee for this project, I look forward to the opening of the new facility in 2016 and the many benefits that will flow to the local community.”