State Government secures guaranteed Port Pirie smelter loan repayment deal, as Treasurer approves change of ownership

The Marshall Liberal Government has announced it has successfully reached a commercial financing agreement with Trafigura Group Pte Ltd, the new owner of the Port Pirie lead smelter, which will secure compulsory repayment of the remaining monies owned under the $291.125 million taxpayer-guaranteed loan.

As part of the deal, Nyrstar Port Pirie paid $29.125 million in May this year and has agreed to repay $58.25 million in deferred payments (originally due in May and November 2018) in November – which will leave an outstanding balance of $203.875 million.

The balance will be paid in 7 half-yearly instalments of $29.125 million between November, this year, and November 28, 2022 – when the loan matures.

Formal State Government consent was required before any change of ownership of the Port Pirie smelter.

Treasurer Rob Lucas said Cabinet had authorised him to approve Trafigura taking over as majority owner – which came into effect in Europe overnight – and converting the Nyrstar Port Pirie perpetual securities to guaranteed secured debt.

This provides much greater certainty by setting a guaranteed repayment regime.

Mr Lucas said it was a “great outcome for the good people of Port Pirie, the smelter’s employees and their families, and the taxpayers of South Australia”.

“After months of constructive discussion and negotiation, we now have a clear path forward for the strong future of the Port Pirie smelter under the new ownership of one of the world’s leading global commodity trading companies, Trafigura,” said Mr Lucas.

“This week, I gave my consent to Nyrstar’s capital restructure which overwhelmingly strengthens the State’s position by providing much greater certainty over the repayment of the loan.

“As one of the world’s largest traders in metals and oil, Singapore-based Trafigura – Nyrstar’s largest shareholder – acknowledged the critical importance of the Port Pirie smelter to the company’s ongoing operations.

“When the Premier and I met Trafigura’s Executive Chairman and CEO, Mr Jeremy Weir, in May, he reassured us he saw the Port Pirie smelter as an important long-term investment.

“We look forward to a positive ongoing relationship with Trafigura.”

Under the financing arrangement, the State Government has agreed to amend certain terms including changes to its guarantee fee allowing Nyrstar Port Pirie (NPP) to hold a lower minimum cash balance, and also changes to the closure indemnity provisions.

Mr Weir said: “We very much welcome this agreement with the Government of South Australia which enables the restructuring of Nyrstar to be completed. We look forward to continuing our constructive dialogue as Nyrstar begins a new chapter.”

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