The chief of Belgian-based metals company Nyrstar has stopped short of guaranteeing it will repay the entirety of an almost $300-million guarantee to the South Australian Government, only confirming it was the company’s “intention”.
- Shareholder company Trafigura will provide cash injection to Nyrstar
- SA Treasurer said funding boost “positive” but deal will be scrutinised
- Nyrstar chief stops short of guaranteeing company will repay $300m guarantee to state
The answer came amid news the company’s largest shareholder, Trafigura, will provide a $US650 million line of credit to the cash-strapped company, and union claims that further job cuts were possible at Nyrstar’s Port Pirie smelter.
Hilmar Rode visited Port Pirie on Wednesday to discuss the company’s plans for its smelter, which includes 120 job losses in 2019.
Mr Rode said Trafigura’s cash injection would help the company get on with business during his visit to Port Pirie on Wednesday.
“It’s a very strong vote of confidence from a major shareholder in the future of Nyrstar and I think it puts us in very good stead in terms of the financing of the company,” Mr Rode said.
“What it means for the company is we can really go about our business focusing on safety, production, cost and lead in air and do all the business we should all be doing.”
When asked whether Nyrstar would repay the State Government $291.52 million, he replied: “It is certainly our intention”.
“We’ve had very constructive discussions this week with [South Australian Treasurer] Rob Lucas,” he said.
“We’ve reached an early stage of a process which will lead up to an agreement in the first quarter where we would intend to be paying $US20 million of actual principal.
“That’s obviously subject to approval by the state and our board, but we’ve made very good progress.
“We wanted to find a way to get an early payment — in other words — quarter one next year in terms of starting to reduce that outstanding balance.”
The company made an $8 million interest-type repayment in May and has confirmed it will pay another $10 million next week.
Trafigura has set strict limits on its financial support.
The deal states Nyrstar Port Pirie and Hobart are among the assets guaranteeing the lending, meaning they could theoretically be obtained by Trafigura if the money isn’t repaid.
It also states the finance can’t be used to “repay, refinance or otherwise redeem any of the group’s bonds or other financial indebtedness”, meaning Nyrstar must find their repayments to the State Government elsewhere.
Funding boost a ‘positive’: Treasurer
State Treasurer Rob Lucas said the announcement of further funding for Nyrstar was “positive” but confirmed the details of the deal would be scrutinised by the State Government.
“Whilst this doesn’t directly impact on the SA Government’s $291.25 million guarantee it nevertheless will provide Nyrstar with additional time to conclude their previously announced capital structure review,” Mr Lucas said.
“However, with respect to the security granted to Trafigura to support the new working capital facility, this is not prohibited by the state’s financing documents.
“This is because it is a security granted by Nyrstar Hobart Pty Ltd and not Nyrstar Port Pirie Pty Ltd.
“However, any enforcement by Trafigura effecting a share sale of Nyrstar Port Pirie Pty Ltd would require the state’s consent to avoid the acceleration of the debt related to the Nyrstar Port Pirie Pty Ltd perpetual securities.”
Former MP Geoff Brock secured the State Government’s funding in 2014 as part of a deal which secured the former Labor government power.
Mr Brock was critical of the company’s handling of information surrounding job cuts.
“It’s been an uncertain period in the last few weeks,” Mr Brock said.
But he said his meeting with Nyrstar’s global CEO, member for Grey Rowan Ramsey and Port Pirie Mayor, Leon Stephens, gave him confidence.
“The information was far more forthcoming — I did indicate to Nyrstar that they need to be a bit more proactive and forthcoming with information to the media and public,” he said.
“I asked the company to come out with a clear timeframe for that transition [to job cuts] and they’ve indicated they will do that.
“Hopefully by the end of November 2019, the new furnace will be up and running and the reductions will come into place then.”
Potential for more job cuts: union
Unions also met with Nyrstar management onsite on Wednesday.
The Australian Workers’ Union (AWU) lodged a breach with the Fair Work Commission last week.
It claimed Nyrstar breached its Enterprise Bargaining Agreement with workers when announcing 120 jobs would go from the smelter in 2019.
AWU branch organiser Mick Hopgood said the company flagged further cuts during its meeting.
“There is a potential for another 33 full-time jobs to go when its sinter plant closes next year,” Mr Hopgood said.
“We will obviously do what we can to protect as many jobs as we can on-site.”
In response to ABC requests for comment on the AWU’s claims, Nyrstar released the same statement it did when confirming the job cuts.
The statement said about 120 jobs would be lost at the site next year, with some coming from the closure of its sinter plant next year.
Topics: lead, states-and-territories, government-and-politics, business-economics-and-finance, industry, sa, australia, port-pirie-5540
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