Australia’s only manganese smelter will close and more than 200 workers will lose their jobs, after a deal to buy the northern Tasmanian plant fell through this week.
Administrators Ernst and Young broke the news to staff at a town-hall meeting on the Liberty Bell Bay site at George Town on Thursday morning.
The plant is the country’s only producer of manganese alloy, a key ingredient in steelmaking. It opened in 1962.
The smelter was placed into administration in March. In May the administrators announced a consortium had agreed to buy the business.
One of the consortium’s main financial backers pulled out last month, leaving the sale in doubt. It fell through this week.
On Wednesday, the consortium told the administrators it had stopped pursuing the sale.
The administrators said the buyer walked away because of problems with the arrangements needed to run the smelter.
“These difficulties were, in part, driven by the broader economic challenges associated with operating the smelter in a volatile global economy,” EY said in a statement.
While the talks were underway, the state and federal governments covered workers’ wages while the consortium funded the wider running costs.
With no viable sale and no money left to keep operating, the administrators decided to begin winding the business down straight away.
“In the absence of both a commercially viable transaction and the funding required to continue operations, the administrators have made the difficult decision to commence the orderly closure of the business with immediate effect,” the statement said.
Administrator Morgan Kelly said all sides had worked hard to save the plant and keep people in work.
“This is an incredibly disappointing outcome for employees, their families and the wider Bell Bay community,” Kelly said.
“Over the past several weeks, all parties worked diligently to pursue a transaction that would preserve the smelter and secure ongoing employment.”
“However, the difficulties with key enabling arrangements means there is no viable pathway to complete the proposed transaction or pursue an alternate transaction.”
Workers will be paid until Monday, when they will learn the outcome of the redundancy process at a meeting at midday.
After that, staff will have to claim their entitlements through the federal government’s fair entitlements guarantee scheme.
The Australian Workers Union (AWU) says that process can take eight to 12 weeks.
Union assistant branch secretary Robert Flanagan said the announcement was a shock to workers who thought the sale was on track.
“We thought the sales process was going along okay so it was a shock to hear today that the consortium wasn’t going to continue,” Flanagan told the ABC.
He said the smelter contributed $420 million to the state’s economy when it was running.
“Obviously, if we lose an industry like this it is very difficult to get it back,” he said.
Flanagan called on both governments to talk to the administrator to see if anything could be done to bring the buyer back.
Premier Jeremy Rockliff and federal Industry Minister Tim Ayres said it was a very sad day for the state.
“This is deeply difficult news for the workers of Liberty Bell Bay and the communities of Bell Bay, George Town and northern Tasmania who have fought tirelessly for a better outcome,” they said in a joint statement.
Rockliff said governments had committed almost $10 million to cover wages during the administration and had offered to consider a $20 million start-up package.
He said the consortium had also been offered a concessional 10-year power deal struck with the previous owner.
Labor leader Josh Willie called the collapse devastating for workers, contractors and their families.
“There was a buyer prepared to invest, keep the smelter operating and keep local people in work. Now that deal has fallen over,” Willie said.
He said the state government should explain whether the power deal between Liberty Bell Bay and Hydro Tasmania was a factor in the sale falling over.
Willie said workers deserved proper support, help finding new jobs and access to mental health services.
Susie Bower, from the Bell Bay Advanced Manufacturing Zone, said support for workers would start immediately.
She said the Northern Employment and Business Hub had been activated, with drop-in sessions running at the George Town Library.
The smelter was previously owned by British businessman Sanjeev Gupta’s GFG Alliance, which placed it into limited operations in May last year, blaming a lack of ore supply.
The Tasmanian government loaned the company $20 million to buy manganese ore, which was delivered in October but never used. It still sits in a stockpile at the site.
In the short term a small workforce will stay on to safely demobilise the site, sell off remaining assets and meet the company’s environmental and regulatory obligations.
Employees will learn their fate at Monday’s meeting.
