PORT PIRIE SMELTING FACILITY (LEAD-IN-AIR CONCENTRATIONS) BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr PEDERICK (Hammond) (15:48): I wish to continue my remarks in regard to the Port Pirie Smelting Facility (Lead-in-Air Concentrations) Bill 2013. Just before lunch I was talking about possible developments that could happen in relation to this facility, especially ones that could happen if we do not support the bill in this house.

There is certainly an option in option two where, in the event that the transformation proceeds, the plant will have a future 30-year life, as I spoke about earlier. This would ensure the viability of the plant and set a longer time frame, using the cash revenues from that transformation. As a subset of this action, Port Pirie's future would be secured for the short to medium term.

There is another option (option three) where if there is no change and no transformation, Nyrstar continues its operation over the short term and the government is forced to ease the regulatory burden upon the company by compromising health and environmental standards. This risks negative impacts on the health of the community and would create a dangerous precedent for environmental and public health grounds.

As I spoke about earlier, the bill seeks to vary the applications of regulatory and legislative conditions relating to the lead emissions from the Nyrstar smelter in Port Pirie. What the bill is trying to do, as I indicated earlier, is lock down the health and environmental standards which the company must meet, and the device used in the bill is to allow the Minister for Industry to intervene if the Environment Protection Authority seeks to vary the agreed maximum lead-in-air condition without consultation and approval of the Minister for Manufacturing, Innovation and Trade and Nyrstar themselves.

We understand that there is a proposed select committee, and we have been informed that there have been negotiations between the minister and the member for Waite, who is leading the bill on our side. I understand that if that select committee is formed it will possibly meet very shortly and, hopefully, bring this bill back to this house on Thursday so that there are no unnecessary time lags in this legislation moving forward.

If we want to talk about some of the risks and opportunities in regards to this legislation, the closure of this plant in Port Pirie would have dramatic and far-reaching economic, social and political implications. It is quite possible that, if the board decided against the transformation in 2014, a windup would be incredibly swift. It is likely, as I mentioned before, that the state and federal governments would be asked to provide significant funding for economic restructuring, and the big hit which could really hit the taxpayer might be the remediation liability and limited means to pursue Nyrstar, who are based in Belgium.

If it is not scary enough, with the state of the budget at the minute with a threatening blowout of a debt out to $14 billion, this could expose the state budget to hundreds of millions of dollars in a contingent liability. A refusal by state or federal governments to act in this way financially in the transformation could precipitate a negative decision from the board. Also, a rejection of the bill in this parliament might also put an end to Nyrstar.

I talked earlier about the potential of a class action, and that is where the $115 million guarantee indemnity provided by the state government may be called upon in order to protect people, especially the investors, in this situation. This risk is wound down over time as the indemnity winds down over a seven-year period. As mentioned before in this house this morning, the health and development impact of lead-in-air emissions in Port Pirie has received considerable media and government attention for decades. Knowing how these things are reported at times, a lot of the time negative media seems to get good press.

It is noted, as I said before, this is where the company has to work with the Environment Protection Authority and the appropriate minister to make sure that an overall result of the transformation will result in significantly lower emissions, and it is also noted that this bill is particularly narrow and limited in its application.

In summing up my comments: obviously, the worst outcome for not only South Australia as a whole but Port Pirie as a regional community would be for Nyrstar to walk away. This would leave a real problem as far as economic restructuring in the Mid North, and a massive liability. We have seen some of these liabilities here locally with the new Royal Adelaide Hospital build, where well over $100 million has been spent on cleaning up that site to build the new Royal Adelaide Hospital.

The best outcome for this state would be for the transformation to proceed smoothly. We know that, from what we are told, if this bill does go through, a modern plant will be able to operate and be profitable for at least the next 30 years and, obviously, work can happen after that into the future to keep a viable lead smelting operation in Port Pirie. I have talked about what can happen with regard to class actions, etc., but so long as everything is properly managed, a successful transformation at the site should be quite achievable.

Nyrstar's processing capacity would ensure that South Australia's mineral resource industry will add much greater value to the broader economy and make a range of potential resource projects more cost effective. With this transformation it will make Nyrstar's operation tenable for the future and, as I said, for at least the next 30 years and potentially longer with more work into the future.

I would like note in my closing remarks that in 2012, the smelter at Port Pirie produced significant amounts of commodity-grade lead, zinc, silver, copper cathode, gold and sulphuric acid. It is noted that there were 158,000 tonnes of lead metal, 31,000 tonnes of zinc metal, 3,000 tonnes of copper cathode, 13.8 million tonnes of silver, and 56,000 ounces of gold produced. It is noted that wages and salaries paid to families depending on this plant to operate at Port Pirie total around $270 million each year, and from these wages about $100 million is paid in tax. Nyrstar's value-add contribution to South Australian gross state product is around $518 million per annum and Nyrstar also adds some $1.6 billion to the value of South Australia's economic output.

I am very pleased to see this legislation in the house. I think we need to do it to make sure we have a viable facility up there at Port Pirie for the community. I acknowledge the work of our Liberal candidate in the area, Kendall Jackson, who has been doing great work in keeping us informed on this side of the house about what is happening with regard to the facility. I would also like to acknowledge the Nyrstar operators and their staff for the full briefings that they always provide when we visit. I know I have been to at least two of those and they do a great job of keeping us in the loop whenever we are in the Port Pirie area as to what exactly is going on.

Ms BETTISON (Ramsay) (15:57): I rise today to talk about and support this bill and its importance to the Port Pirie community. What this bill represents is what this government is all about, that is, supporting business, supporting community and in line with government—so business, community and government working together. This bill is about introducing and operating bath smelting technology to the Port Pirie smelter, supported by regulatory certainty for 10 years. This will provide a number of benefits to the Port Pirie community—economic, environmental and social benefits as well. The Port Pirie community has endured many years of uncertainty and speculation about the future of the smelter.

The community now has a pathway to a more certain future with this bill. Along with other elements of the South Australian and Australian government's agreement with Nyrstar, announced in December 2012, this provides a key element of support for the transformation of the smelter to secure substantially reduced lead emissions and long-term security for Nyrstar workers. I spent a lot of time growing up in the country and I know how important it is in a small country town to know that there is job certainty in the future. I am very proud of this government's working to support the people of Port Pirie.

What the long-term security will imply is the ease for replacing an existing 60-year old sinter plant with modern, enclosed bath smelting technology, the best available for lead smelting. This enables dedicated systems to more fully capture gas emissions that contain lead and other materials, resulting in dramatically reduced emissions levels for the facility. This will result in improved environmental outcomes capable of meeting more stringent environmental standards that are required in today's modern world and by environmental regulators, including the state's Environment Protection Authority.

Reduced lead-in-air emissions will contribute to improved health outcomes for the Port Pirie community. Exposure to lead deposition in the environment is a major contributor to elevated blood lead levels in young children aged zero to four years and particularly for children up to two years of age. Reduced emissions means reduced levels of lead deposition and, as a consequence, will lead to an improvement in blood lead levels and in the number of children whose levels are below the Australian guideline of 10 micrograms per decilitre. The aim is for air lead concentrations to be reduced by at least 50 per cent, and the number of children below the guideline for blood lead is projected to improve from 75 per cent to 90 per cent.

The smelter is Port Pirie's largest employer. It currently employs around 725 employees and 120 contractors. Of Port Pirie's total work force, this represents around one in five people who directly rely on the smelter for their employment and livelihood and 98 per cent of the people employed in the town's manufacturing sector.

The smelter's operation supports a wide range of local businesses through ongoing maintenance and servicing requirements. A supported investment in this technology upgrade delivers ongoing employment and business opportunities for the regional community, and with the introduction of new technology, opportunities for training and development in new skills and knowledge.

This technology upgrade will deliver a long-term commercial and sustainable future for the facility, the community and the region. It will deliver better environmental and health outcomes for the community and surrounding region. It will provide certainty and confidence to residents of Port Pirie for decades to come. Importantly though, these outcomes would not be achieved without the support from government to Nyrstar and its investors in the form of environmental performance certainty for the upgraded facility. This is what this bill delivers to Nyrstar, investors and the Port Pirie community.

Ms THOMPSON (Reynell) (16:02): Many members here have noted the great benefits to Port Pirie, its residents, the regional community and also to residents of Tasmania that will be enabled by this bill. However, as I come to the end of my term in this parliament, I want to put on record my appreciation of the way in which this bill has been developed.

It occurred to me while I was thinking about this matter that I first came into contact with the organisation that is now Nyrstar when I was involved in a committee providing a recommendation to minister Cornwall on some matters relating to the health of the community in Port Pirie. I was then involved in another committee providing recommendations to a minister whose name I cannot remember. It looked at the measures which were necessary to allow women to work in the smelter. That might seem a bit strange now, and I do not know how many women are in fact working in the plant, but it was important that given this was the major employer in Port Pirie, all residents—regardless of gender—had the opportunity to work in the area.

What was also important at the time was that every time a specific group such as children and women was focused on benefits accrued to everyone. All workers in the smelter were going to be safer as a result of analysing what was necessary to allow women to work safely in the smelter. Indeed, there was some consideration that men's reproductive capacities were also affected by lead. The evidence there was not as clear—it is a long time ago and I do not remember all of the details—but it was clear that all workers were going to be better. However, these negotiations, discussions, considerations, were not always easy. Not only did one government agency not agree with the others, but the negotiations with the companies that preceded Nyrstar were not always cooperative and the end was not always mutually agreed; so, I was really pleased to see the way this bill had been produced.

I commend the minister for the establishment of the joint Nyrstar government task force, which was established in May 2012, to deal with a range of matters relating to the proposed Nyrstar transformation. This task force was led by an eminent South Australian, Bruce Carter. I thank him also for giving his considerable expertise towards solving this issue of how Nyrstar could continue to prosper in a healthy way for all the residents of Port Pirie, and not only prosper as it is, but to transform itself to provide greater potential for the South Australian economy in moving from lead to a wider range of mineral substances, although I recognise that there are other substances at the moment.

The state government's case management approach is to coordinate expertise and input of officials from a range of key state government agencies, such as the Department for Health and the Environment Protection Authority, using a structure of eight working parties to assist the progress of this important project. The proposed transformation of Nyrstar at Port Pirie includes a range of complex matters that are being addressed in parallel by the task force and the working groups. These working groups have been considering such diverse areas as environmental improvement, the targeted lead abatement program, the development assessment process, feasibility studies, legislation and legal agreement.

The future of Nyrstar, as we know, is intrinsically linked to the future of Port Pirie and its residents. The work of all the state government officials, commonwealth government officials, Nyrstar and community members, who have put themselves forward to help solve this problem and get a good strong future for Nyrstar in Port Pirie, is greatly appreciated, and I commend that work to the house. The cooperative manner, the problem-solving focus of these groups, has been very important and is something we can all learn from. Thank you.

Mr VENNING (Schubert) (16:07): I have had a long personal association with this Nyrstar smelter. We always referred to it as 'Port Pirie smelter'. It is probably not very sexy to say that today, but that is what it always has been. It has been the most pivotal business not just in Port Pirie but for the whole region for many, many years. In fact, ever since 1889 it has been there, and it built the port infrastructure and, of course, in later years the bulk handling of grain is able to add to that wharf and use it. Then it became a pivotal port back in those years chiefly because BHAS was there.

Yes, it is the largest lead smelter in the world. Of course, we know that lead is not compatible. I know all about lead because I rubbed it off a bridge not long ago. It is a mineral that is not compatible to human living. Over the years much has been done to alleviate it, particularly when you consider all those houses in the Pirie West area. Most of those houses were completely stripped. They got rid of all the lead dust, and some were totally replaced. The cost of that was huge. I do not know who actually met that cost, but it was massive. Then, of course, there was the building of the huge stack which was put up there to protect Port Pirie.

Port Pirie has been called all sorts of things over the years, affectionately, and one name was 'sulphur city'. I have not heard anybody call it that for many, many years, certainly since that stack has been there, because the stack is visible for miles and miles around. In fact, when you are flying around, the top of the stack is up with you in a lot of cases.

I certainly am very much aware of the history of this place because, as a younger person, I had a business association—I will declare that—with this company. I used to have a bit of a contract for the supplying of machinery, particularly the buying of their older surplus machines—a lot of which came onto the farm—and also for the supplying of some product for the smelters in the early days, mainly with BHAS.

I also say that the employees of BHAS and, no doubt, those of the subsequent companies, were very important people in our community. When I was the president of the Crystal Brook Show Society, we had a fantastic arrangement with the workers of BHAS because they had the picnic grounds at the Crystal Brook creek. Can I say there were several people there, and Pud Demarco was only but one.

Mr Brock interjecting:

Mr VENNING: Mr Brock was another. These people were quite legendary. On Crystal Brook show day, they would allow us to use their grounds down at the creek, which was a marvellous thing for the dog show and all sorts of things. On the day after the Crystal Brook show, they would put on a barbecue down there for us, after we had cleaned up the oval. This is the sort of wonderful cooperation these people offered.

Of course, the smelters picnic was always held at the Crystal Brook Showground back ground and they used to run a train down there. It was a special train that ran from Port Pirie to Crystal Brook. It brought all the people down and would take them back again. They had sports and a lot of the famous cyclists used to race their bicycles on the smelters picnic day, so it was a big family day.

The point I am trying to make is this business has been pivotal to the whole region—not just as a business but also as a cultural and personal attribute that we all certainly appreciated. That is in the past, and I pay tribute to all those people who worked at BHAS. I have been in the BHAS—do they still call it that at the club?

Mr Brock: Community club.

Mr VENNING: —the community club in Port Pirie. It is quite interesting to go in there a time or two and share a lot of the memories with the members. Is Pud Demarco still with us?

An honourable member interjecting:

Mr VENNING: He has passed—not very long ago. He was a legend. He had a shorter haircut than me—at least he had hair. I just want to pay tribute. When BHAS handed it on, of course, then we had Pasminco—I knew several of the chairmen of the Pasminco company at the time—and then it was Zinifex and now Nyrstar. There are 858 people working there as employees, but the workforce is 5,240 and there are 2,500 indirect jobs in the town and the region.

Even though, as a parliament, we have to understand this business, even though it is the largest lead smelter in the world, it is a bit tricky because we have to consider people's health. The blood lead levels in the young people in Port Pirie, as the member for Frome would know, have always been a concern.

I do not know what the real answer is but, I think in this instance, we want to see this intervention, particularly the $150 million investment from the third-party investors, guaranteed by the commonwealth government's Export Finance and Insurance Corporation, a $100 million sale of the silver futures from Nyrstar and $100 million invested by Nyrstar. The money needs to go in. We have had several meetings up there, and I know that the company is going to do all it can, because it is a very important business.

Can I say that it is all very easy to flick this business off and say, 'Look, we will take it somewhere else,' but regional employment in South Australia, as you know, sir, and we all know, is pretty difficult. Here is a major employer in a regional community and it is in a pivotal place. I only hope that, in the years to come—there is a move afoot now—we can increase the port activity in Port Pirie and, in fact, somehow provide the capacity to handle larger ships, not just for Nyrstar but also so that they can bring in product for reprocessing and then export the product as well.

Mr Brock: I am working on that now, Ivan.

Mr VENNING: We are, I know—everybody is. Everybody is talking.

The Hon. T.R. Kenyon: Brockie already is.

Mr VENNING: Yes, so is Kendall Jackson. She is talking about it as well. It is a big subject. Let us look at it. Port Pirie is a fantastic place to benefit from this. The railway line is there—a major railway line. We have large grain silos there. It is the centre of the wheat belt on this side. I know we are talking about ports on the other side of the gulf, but most of the wheat is grown on this side, year in, year out. I know we get some great crops from the other side, but they are nowhere near as reliable as the crops on this side. Over the years, in my younger days, I would have taken hundreds and hundreds of truckloads of wheat to Port Pirie. The boats came in and they loaded up. It was very efficient and we all appreciated the service we got very much.

Of course, now that the port is no longer big enough or deep enough for these big ships, we are putting it on rail at Crystal Brook and it goes to Port Adelaide. Thank goodness we now, thanks to minister Conlon, have a deep sea port down there. I do give accolades when they are required and I give him that. It is great that we have a deep sea capacity there. It is the only one on this side of the gulf, and that is a disgrace; we need to have some more.

When we consider what this facility does and how important it is, I am pleased to hear the government members—I did miss the member for Frome's speech, but I will read it in a minute—are supportive of this, because certainly we all are. Yes, we are all very vigilant, because today when you sell wheat overseas, the detection equipment is now so sensitive that they can pick up traces of heavy metals. This is why, even though we are 36 kilometres from that stack, we are aware of a slight increase in that.

For all our sakes, if we can do something about this we should. Without labouring the point—we do not want to create anything scary out there—we are very much aware that we are in a prime wheat growing area and all these years we have existed very well with the smelter being there. All I can say is, I am going to be gone from here in 8½ months, so I just hope with all hope that this business can continue well into the future, because it has been part of our history, particularly in regional South Australia, and I hope it will long be that way.

The Hon. T.R. KENYON (Newland—Minister for Manufacturing, Innovation and Trade, Minister for Small Business) (16:16): There are just a few points I want to raise. I agree with just about everybody's point that Nyrstar is an incredibly important company for Port Pirie. It is quite clear with employing such a large percentage of the town at any one point that were this smelter to close there would be catastrophic consequences for the local community. While we are still waiting on the final investment decision from Nyrstar, it is fair to say the government is doing everything it can to make sure that this investment decision is a positive one, that they decide to reinvest in their plant, in fact build a completely new plant, and to continue processing lead, silver and other minerals at that location. It is certainly something I am very keen to see.

The member for Waite talked about the indemnity that would accrue to the government as a result of this bill and the agreements made with Nyrstar. I just want to make sure the house is clear that the indemnity is not a general indemnity; it is in fact an indemnity that relates only to certain decisions, environmental decisions, made by the government that would affect the continued operations of Nyrstar as result of decisions made around environmental conditions and regulations. That is what the indemnity will be based around and it declines over time. For every year our silver is delivered from the new plant, that indemnity declines over time.

The member for Frome spoke quite eloquently about the effect on his community and the importance to his community of the Nyrstar thing. I should point out that the member for Frome has been an absolute champion for this project. He has never missed an opportunity to talk to the government, to talk to investors, to talk to the company, to talk to anybody who will listen about the importance of this project and what they can do to help it get along. I would just like to acknowledge that, that the member for Frome has done everything he possibly could to get this deal and this rejuvenation happening.

He talked about being annoying, and just for the record I want to confirm to him and to the parliament that he did get to the point of being annoying with his vociferous campaigning on behalf of this. Just so that no-one is in any doubt, the member for Frome is right, he almost annoyed people because he was so keen to talk to people. He did not, of course, and everybody understands that he was advocating passionately and in a dedicated fashion on behalf of his community, as he always does.

I would suggest to Nyrstar, should they make the investment decision and build the plant, that they might want to call it the Geoff Brock plant, the Geoff Brock refinery. That might be an appropriate recognition of his contribution to this project. I do not know that he will be campaigning for that—I do not think he will, but it would be worth considering and I might put it to them when they come over next.

The member for Waite has raised some questions about the select committee. My inclination is to agree that it is, in fact, a hybrid bill and therefore needs a select committee to go through it. However, even if you accept the arguments put forward by the member for Waite, and he went through them in some detail, it has been the practice of this house to do this for a long time. It is a practice that I am not necessarily disagreeing with, to be honest, because, if we are going to confer a benefit on an individual company, it is important that the parliament has the opportunity to give it an extra degree of scrutiny.

In general, we need to be very cautious about bills that give a benefit to a particular company. We should not go around doing this at a moment's notice, which we do not, of course. However, when one does come up, it has been the practice in the past. I was a member of the committee that looked into the indenture bill around the Penola pulp mill. The member for MacKillop, I think, was on that committee as well, and the member for Ashford, if I remember rightly, was also on that committee. That was an important piece of legislation and, because it was conferring a benefit on an individual company, it was important to give it that scrutiny, which we did. That is why I think that it is important that the house has the opportunity to give this bill an extra degree of scrutiny, and we will do that in good time.

I thank the opposition for allowing the bill to pass speedily through the house. Hopefully, it will; I do not want to anticipate how things may go, but certainly the opposition has been very cooperative in dealing with this bill. I think that I will do the thanks in the third reading, assuming that we get to that point. There are a lot of people who have got us to this point. I will name them at a later point, but I would like to thank them for their contribution.

It has been a long and arduous process, in many ways, getting to this point. It has been complicated, and there has been a great deal of dedication shown by a great number of people, ranging from those who are working on getting the investment decision and getting the government support package created and then in place, right through to the parliamentary counsel, of course, and those involved in the drafting and the negotiation of the bill. I will name them at a later point, but I would like to put on the record now the fact that a large number of people have been involved in getting the bill to this point. With those few words, I commend the bill to the house.

Bill read a second time.

Referred to Select Committee

Hidden_Subproceeding:Referred to Select Committee

The DEPUTY SPEAKER: I advise the house that this is a hybrid bill within the meaning of joint standing order No. 2.

The Hon. T.R. KENYON (Newland—Minister for Manufacturing, Innovation and Trade, Minister for Small Business) (16:23): I move:

That this bill be referred to a select committee pursuant to joint standing order No. 2 (private bills).

The DEPUTY SPEAKER: The member for Waite.

Mr HAMILTON-SMITH (Waite) (16:24): Thank you for your guidance, Mr Deputy Speaker, that this is a hybrid bill. For the reasons mentioned earlier, I would love to have a discussion with you about that, but I think that it is probably more appropriate that I take that up with the Speaker himself in person and work out a process to bring something back to the house for a decision. As indicated earlier, the opposition will be supporting the select committee, so I second the motion.

Motion carried.

The Hon. T.R. KENYON (Newland—Minister for Manufacturing, Innovation and Trade, Minister for Small Business) (16:25): I move:

That a committee be appointed consisting of the Minister for Transport and Infrastructure (Hon. Mr Koutsantonis), Mr Hamilton-Smith, Mr Griffiths, Mr Brock and the mover.

Motion carried.

The Hon. T.R. KENYON: I move:

That the committee have power to send for persons, papers and records, and to adjourn from place to place, and that it report on 25 July 2013.

Motion carried.

The Hon. T.R. KENYON: I move:

That standing order 339 be and remain so far suspended as to enable the select committee to authorise the disclosure or publication as it sees fit of any evidence presented to the committee prior to such evidence being reported to the house.

The DEPUTY SPEAKER: An absolute majority not being present, ring the bells.

An absolute majority of the whole number of members being present:

Motion carried.