Governance worries for Future Made in Australia bailout as Nyrstar awaits Belgian investigation

The South Australian refinery which scored a huge taxpayer-funded bailout is at the centre of a years-long probe by European regulators into allegations its parent company misled investors. Manufacturer Nyrstar was handed $135 million by the Federal, South Australian and Tasmanian Governments last week to support troubled lead and zinc smelters in Port Pirie and Hobart. But The Nightly can reveal the Nyrstar group is awaiting the outcome of an investigation by Belgium’s Financial Services and Markets Authority under European market manipulation laws. It will add to concerns about the governance of the Federal Government’s Future Made in Australia agenda amid reports that a further large-scale cash injection for the metal manufacturing industry is under consideration. The Belgian authority investigated claims Nyrstar had issued “misleading communication about the redevelopment of its Port Pirie smelter”, a spokesman for the FSMA told The Nightly. Nyrstar was also scrutinised over allegations the company had published a “misrepresentation of its solvency and liquidity position” and “misleading information about its relationship with Trafigura” — the Singaporean business which took control of Nyrstar in 2019. “All of these were communicated in the (third quarter) 2018 press release and on Nyrstar’s website,” the FSMA’s spokesman said. The matter was referred to the Public Prosecutor in Antwerp to consider criminal charges, and legal proceedings are still pending. The regulator’s management committee is considering fining the company. Top economists were last week warning the Federal Government that bailout plans might leave taxpayers on the hook for decades, taking funds away from debt repayment and community services. Financial records show Nyrstar’s Australian arm had accumulated a whopping $1.4bn of losses on its balance sheet by June 2024. Adding to the pain was an eye-watering $423m writedown through the 2024 financial year — contributing to a $432m loss. Asked whether the Federal Government was aware of the Belgian investigation, a spokeswoman for Industry Minister Tim Ayres did not directly respond. “This investment reflects three governments engaging constructively with Nyrstar on a serious assessment of the viability of critical minerals processing in Australia,” the spokeswoman said. “As a part of this package, Nyrstar will produce minerals vital to strengthening global supply chains. In Port Pirie, antimony and bismuth, and in Hobart germanium and indium. “This will mean that Port Pirie will be the only producer of antimony metal in Australia and one of the few producers globally. “Sustainable and competitive smelting capabilities in Australia that can deliver critical minerals projects are part of the Albanese Labor Government’s Future Made in Australia agenda.” Nyrstar also did not comment on the Belgian investigation. The company told the Government it had two options for the refining plants — closure or a bailout. It did not directly respond when asked why a restructure through an administration was not considered an option. “There are a number of factors contributing to Nyrstar Australia’s current financial challenges,” a spokesman said. ‘Global industrial dynamics are shifting, operating and capital costs are escalating and revenues from by-products, metal premiums and treatment charges continue to deteriorate and there is global oversupply of smelting capacity. “These difficult operating conditions are affecting smelters globally and nationally.” He said the cash would help the company study the feasibility of upgrading Port Pirie and Hobart to supply long-term.