SA Economy

[Jaymz]

Commsec has release its quarterly State of the States report. S.A has moved up one spot to fifth with construction travelling along very nicely and mid ranked on several other indicators.
As per usual it's our very slow population growth keeping us in the middle of the pack. Just a note, these rankings are based on current performance against the decade average for each state....

https://www.documentcloud.org/documents ... -2018.html

[Jaymz]

From tomorrows Advertiser.....

"Nyrstar financial crisis could hit SA taxpayers with $291m bill for Port Pirie smelter loan, Treasurer Rob Lucas warns
Adam Langenberg, Political Reporter, The Advertiser
November 13, 2018 5:26pm

Nyrstar axed 100 jobs at Port Pirie just last week
In May it missed its first loan repayment to the State Government
South Australian taxpayers could be on the hook for $291 million in debt owed by Port Pirie smelter owner Nyrstar, as the company’s share price plunges and doubts about its future grow, Treasurer Rob Lucas has warned.

Mr Lucas says the State Government will do all it can to protect “the $291.25 million in taxpayer funds that we have swinging in the breeze”.

A financial analyst is urging investors to ditch their shares in Nyrstar as the metals giant’s share price continues to crash.

Nyrstar’s share price plunged to 63 Euro cents today, an 86 per cent decline from its 4.50 Euro share price in mid-September.

Analyst ABN Amro urged investors to “abandon ship” and predicted that Nyrstar shares will be virtually worthless as the company grapples with a cashflow problem and $531 million of debt needing to be repaid by next September.

Nyrstar is Port Pirie’s biggest employer, with an estimated 600 to 700 workers. About 100 were axed last week.
It predicts Nyrstar will pursue a debt for equity swap, where a creditor agrees to cancel some level of debt in exchange for a stake in the company.

The former Labor government underwrote Nyrstar building a new smelter at Port Pirie as part of a deal former premier Jay Weatherill struck with Independent MP Geoff Brock to secure a fourth term in power.

The deal has come under consistent criticism from Mr Lucas after Nyrstar delayed repayments to the State Government.

Nyrstar axed about 100 jobs at Port Pirie last week. Exact job numbers at the smelter are not known but it is believed to employ about 600 to 700 people.

Mr Lucas cautioned against overreacting to the opinion of “one particular analyst” but said the State Government was worried about the analysis and the drop in Nyrstar’s share price.

“I don’t think anyone would not be worried by the reports. Given the potential impact of the stories referencing its international operations, it would be no surprise that we share those concerns,” he said.

“Nyrstar itself would also be concerned by the advice, although I suspect they would argue about its accuracy. They would certainly prefer that that sort of analysis was not done.

“It will be interesting to see when the market settles down if it settles down at that level (that ABN Amro has predicted).”


Nyrstar’s share price has crashed to 63 Euro cents, less than a fifth of its Euro 4.50 share price in mid-September. Picture: Karen Seindanis
The company’s underlying problems stem from a combination of plunging zinc prices, a heavy debt load and cashflow issues, ABN Amro said.

Mr Lucas will meet with Nyrstar chief executive Hilmar Rode next Monday. He guaranteed the government would “do all we can” to protect the operations in Port Pirie and to protect the interests of South Australian taxpayers on the hook for the loan to Nyrstar.

The share price hit comes as an Environment Protection Authority report showed levels of lead in the air in Port Pirie spiked to their highest since 2014, despite the operation of a new furnace that was spruiked as helping to lower emissions.

Industrial unions will meet with Nyrstar’s Port Pirie management on Wednesday over the rising lead levels and looming job losses.

Labor energy spokesman Tom Koutsantonis, who as former treasurer underwrote the deal with Nyrstar, did not comment directly on the share price plunge but called for the government to cease using “highly provocative language” about the company.

“Public threats of legal action by the government send negative signals to Port Pirie’s biggest employer,” he said.

Mr Brock said the reports were “not great” but wanted to focus on the positives the new lead smelter would bring when it was fully operational.

“We’ve got the chief executive of Nyrstar meeting with the Premier and the Treasurer next week and they’ve given me their undertaking to keep me in the loop as the local member,” he said.

“We all want to work collectively to ensure this plant reaches full operational capacity.”

Nyrstar did not respond to requests for comment."

[SRW]

Given the taxpayer dollars and Port Pirie livelihoods tied to Nyrstar, why on earth is Mr Lucas running a public commentary on its fortunes? I think he's forgotten he's in government now, and has to play the confidence game. Any issues with the government's loan guarantee should be negotiated discretely.

[Jaymz]

Given the taxpayer dollars and Port Pirie livelihoods tied to Nyrstar, why on earth is Mr Lucas running a public commentary on its fortunes? I think he's forgotten he's in government now, and has to play the confidence game. Any issues with the government's loan guarantee should be negotiated discretely.

Sorry, I couldn't disagree with you more. Not if it's public money. Are you suggesting this type of thing should get kept secret from the public?

[SRW]

Given the taxpayer dollars and Port Pirie livelihoods tied to Nyrstar, why on earth is Mr Lucas running a public commentary on its fortunes? I think he's forgotten he's in government now, and has to play the confidence game. Any issues with the government's loan guarantee should be negotiated discretely.

Sorry, I couldn't disagree with you more. Not if it's public money. Are you suggesting this type of thing should get kept secret from the public?

I never said that. Transparency is one thing, but process is another. Mr Lucas should be negotiating an outcome with Nyrstar, not imprudently running his mouth in the media. If he can't achieve an outcome for taxpayers via negotiation, then there's arbitration or litigation. By talking down the company to the market, he's piling-on for their decline and possible bust. That's not a positive outcome taxpayers or Port Pirie workers.

[SBD]

Given the taxpayer dollars and Port Pirie livelihoods tied to Nyrstar, why on earth is Mr Lucas running a public commentary on its fortunes? I think he's forgotten he's in government now, and has to play the confidence game. Any issues with the government's loan guarantee should be negotiated discretely.

Sorry, I couldn't disagree with you more. Not if it's public money. Are you suggesting this type of thing should get kept secret from the public?

I never said that. Transparency is one thing, but process is another. Mr Lucas should be negotiating an outcome with Nyrstar, not imprudently running his mouth in the media. If he can't achieve an outcome for taxpayers via negotiation, then there's arbitration or litigation. By talking down the company to the market, he's piling-on for their decline and possible bust. That's not a positive outcome taxpayers or Port Pirie workers.

I don't see it as talking down the company. The article is from the political reporter, not a financial reporter.

Mr Lucas says the State Government will do all it can to protect “the $291.25 million in taxpayer funds that we have swinging in the breeze”.

That is signalling to potential investors that the smelter could have an informal government guarantee.

The report cites an ABN Amro analyst, and says

Mr Lucas cautioned against overreacting to the opinion of “one particular analyst” but said the State Government was worried about the analysis and the drop in Nyrstar’s share price.

Nyrstar is a European company with operations in several countries. For all we know, the background negotiations will have a South Australian company get a good deal on a recently-refurbished smelter with a skilled and committed workforce.

[SRW]

Sorry, I couldn't disagree with you more. Not if it's public money. Are you suggesting this type of thing should get kept secret from the public?

I never said that. Transparency is one thing, but process is another. Mr Lucas should be negotiating an outcome with Nyrstar, not imprudently running his mouth in the media. If he can't achieve an outcome for taxpayers via negotiation, then there's arbitration or litigation. By talking down the company to the market, he's piling-on for their decline and possible bust. That's not a positive outcome taxpayers or Port Pirie workers.

I don't see it as talking down the company. The article is from the political reporter, not a financial reporter.

That matters little for the tone of language used. I've read his comments here and earlier on the matter as being imprudent and mostly unnecessary. Apparently not everyone has. I guess we'll see in the fallout.

[SBD]

I don't have a feeling for the current sources of ore for the smelter or the relative scale. I imagine the state could do worse than having Nyrstar sell out its Australian smelter for a low price to an SA mining company such as Hillgrove Resources or Terramin.

[ml69]

I don't have a feeling for the current sources of ore for the smelter or the relative scale. I imagine the state could do worse than having Nyrstar sell out its Australian smelter for a low price to an SA mining company such as Hillgrove Resources or Terramin.

Wonder if Whyalla steelworks owner Sanjeev Gupta is circling?

[Jaymz]

I don't have a feeling for the current sources of ore for the smelter or the relative scale. I imagine the state could do worse than having Nyrstar sell out its Australian smelter for a low price to an SA mining company such as Hillgrove Resources or Terramin.

Wonder if Whyalla steelworks owner Sanjeev Gupta is circling?

Smart thinking. And yep that was reported in today's online version of The Advertiser....... just speculation at this stage. Should be in tomorrows hard press version.

[Spurdo]

The most logical assumption is that Sanjeev Gupta will buy the smelter if Nyrstar goes under, however there may be some other companies interested such as Glencore, South32 ,Vale or possibly OZ Minerals. As SBD said, it would be good if a South Australian company like Hillgrove or Terramin could buy the smelter, but I think a purchase like that could be a bit too big for those companies considering their current financial state (Hillgrove, not so much, but Terramin has had some issues over the past few years)

[Jaymz]

The most logical assumption is that Sanjeev Gupta will buy the smelter if Nyrstar goes under, however there may be some other companies interested such as Glencore, South32 ,Vale or possibly OZ Minerals. As SBD said, it would be good if a South Australian company like Hillgrove or Terramin could buy the smelter, but I think a purchase like that could be a bit too big for those companies considering their current financial state (Hillgrove, not so much, but Terramin has had some issues over the past few years)

OZ Minerals is also a South Australian company, now headquarted at the Adelaide Airport precinct.

And agree with your comment, the smelter is beyond the scope and capabilities of companies such as Hillgrove and Terramin.

[rev]

I don't have a feeling for the current sources of ore for the smelter or the relative scale. I imagine the state could do worse than having Nyrstar sell out its Australian smelter for a low price to an SA mining company such as Hillgrove Resources or Terramin.

Wonder if Whyalla steelworks owner Sanjeev Gupta is circling?

Smart thinking. And yep that was reported in today's online version of The Advertiser....... just speculation at this stage. Should be in tomorrows hard press version.

It would be better if another company bought it, rather then putting more eggs in the same basket.

[SouthAussie94]

OZ Minerals (under their previous guise of Zinifex) owned the smelter until 2007 when Nyrstar took over.

I've had the displeasure of spending time at the smelter in the past. It's an absolutely horrific place to spend time..

[Spurdo]

So, a bit of an update on the Port Pirie Smelter. I found this article in The Advertiser today, its paywalled but it basically says that Nyrstar has been bailed out for around $900,000,000 by their largest shareholder, Trafigura Group. However, if the smelter ever gets put up for sale my bet is that either Glencore or South32 will most likely buy it.

- https://www.adelaidenow.com.au/business ... 1cca82d03a