Australia announced on Tuesday a financial aid package of A$135 million ($87.4 million) for two Nyrstar-owned smelters, a subsidiary of Trafigura.
The initiative aligns with Australia’s goal of becoming a crucial supplier of critical minerals to Western allies, according to a Reuters report.
Australia’s critical minerals push
Amid increasing concerns about supply chain vulnerabilities linked to China, Western nations face mounting pressure to secure critical minerals essential for both the energy transition and defense.
In response, federal and state governments have announced funding, complemented by investment from Nyrstar, to address these issues.
Despite Australia’s ambition to be a leading force in the global shift towards new energy, its metals processing industry faces significant challenges.
High energy and labor expenses, coupled with a surplus of supply from primary producer China, continue to suppress prices, putting the sector under considerable pressure.
Strategic review and modernisation
Nyrstar placed its Port Pirie lead smelter in South Australia and Hobart zinc processing operations in Tasmania under strategic review earlier this year. The company attributed this decision to elevated energy costs and reduced processing fees.
Nyrstar can now sustain its operations due to the support package.
This will enable the company to pursue the modernization of both its facilities and expedite research into producing critical minerals. Specifically, the studies will focus on germanium and indium in Hobart, and antimony and bismuth in Port Pirie.
Nyrstar announced its initial focus will be on expediting an antimony pilot plant in Port Pirie.
The company had previously informed Reuters in May of its consideration to produce antimony, a metal used in ammunition and lead-acid batteries, at the site.
Modernising Australia’s aging smelters will demand substantial capital, potentially challenging the commitment of both the government and taxpayers.
Supply disruptions
China, a dominant force in the global processing of numerous critical minerals, has recently implemented export restrictions on antimony and rare earths.
This move has disrupted supply chains in sectors such as automotive and defence, highlighting the geopolitical vulnerabilities associated with an over-reliance on Chinese refining capabilities.
Western governments and the Trump Administration are now prioritising the establishment of an alternative supply chain.
South Australian Premier Peter Malinauskas issued a warning that China could monopolize global smelting capacity if Western nations fail to intervene. He conveyed to broadcaster ABC that this presents an “unacceptable risk,” especially given the current geopolitical climate.
Tim Ayres, Australia’s minister for industry and innovation, informed the ABC of his expectation that Port Pirie would be able to produce 15,000 metric tons of antimony metal.
Antimony serves as a hardener for other metals in ammunition and batteries. It is essential for producing semiconductors used in electronics and defense. Additionally, it is utilised in flame-retardant materials.
Impact and challenges
Meanwhile, the Nyrstar bailout could prompt other struggling processing companies to seek government assistance.
IGO, announced last week that it is evaluating the future of its unprofitable lithium hydroxide plant, located near Perth. This plant is operated by its joint venture partner, Tianqi Lithium.
Both Glencore and Rio Tinto are seeking government support for their Australian smelters due to high power costs. Glencore has requested assistance for its Mount Isa copper smelter in Queensland.
Similarly, Rio Tinto has consistently highlighted the challenging outlook for its Tomago aluminium smelter in New South Wales, which is the state’s largest energy consumer, due to expensive electricity.
A year ago, BHP put its Western Australian nickel operations on hold.
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