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

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (16:30): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This is an important Bill for many reasons—it is essential to securing the continued prosperity of the Port Pirie community, it is essential to improving environmental outcomes in and around Port Pirie, and most importantly it is essential to ensuring continued investment aimed at further improving the health outcomes for the children of Port Pirie.

Nyrstar's Port Pirie facility is one of the world's largest primary lead smelting facilities and the third largest silver producer. It is an integral part of the fabric of the community, having been a mainstay of the regional economy during continuous operation for more than 120 years.

The operation directly employs more than 850 people, or around 17 per cent of the working population in the town.

It incorporates a lead smelter and refinery, a precious metals refinery, a copper plant and a zinc plant. In 2012, Nyrstar Port Pirie produced significant amounts of commodity grade lead, zinc, silver, copper cathode, gold and sulphuric acid. For the record—158,000 tonnes lead metal, 31,000 tonnes zinc metal, 3,000 tonnes copper cathode, 13.8 million ounces silver and 56,000 ounces gold.

In 2011, Nyrstar and the South Australian Government began discussions to determine the best way forward for the company's Port Pirie smelting facility, in the expectation that new licensing arrangements with the Environment Protection Authority would require additional investment to transform the existing operation.

During 2012, the State Government established the Port Pirie Transformation Taskforce to work with Nyrstar and Commonwealth and State agencies to determine the best way forward—to deliver certainty to the company and a long-term future for Port Pirie.

Under the leadership of the Port Pirie Transformation Taskforce, the Federal and State governments agreed to a range of measures to support Nyrstar's Transformation proposal because of the regional significance of the facility for Port Pirie's local economy and workforce and because the employment of modern smelting technology would result in significantly improved environmental and health outcomes for the community.

The State providing regulatory certainty is a cornerstone of this agreement. Without that certainty, the investment in the Transformation would not happen, and the benefits would not be realised.

Put simply, this Bill provides that regulatory certainty.

The progression of the Transformation into execution is dependent on the successful completion of feasibility and engineering studies, expected by the end of 2013.

The company is expected to make the decision to invest in the transformation in early 2014.

The Transformation would result in the smelter's existing and aged facility being replaced with modern, state of the art and proven processing technology. Technology transformation will result in the Port Pirie facility significantly improving its environmental performance, as well as enabling the company to be more flexible in the recovery and delivery of a broader range of products into the metal market.

A transformed facility, supported by operating licence certainty, provides a long-term, sustainable future for the facility and the Port Pirie community.

Assuming that the Transformation is completed as expected, the project should move into construction in 2014, with commissioning of the new plant by early 2016.

The Bill does two key things.

Section 4 provides that, for a period of 10 years following the date on which the EPA sets the maximum lead-in-air condition in the operating EPA licence for the completed project, the EPA may not vary that condition except in circumstances where the variation has been either approved by the Manufacturing Minister or where the company has consented to the variation. This section relates only to any conditions of the EPA licence that set the maximum permissible concentrations of lead in air in Port Pirie.

Section 5 modifies the law of the State to the extent that any requirement that would have the effect of reducing the maximum permissible concentrations of lead in air at licensed locations in Port Pirie does not apply, unless a determination is made by the Manufacturing Minister that a particular law or authorisation does apply. The Manufacturing Minister may only make such a determination in one of two defined circumstances; 1) either the company has consented to the making of the determination, or 2) the Manufacturing Minister has undertaken consultation with both the company and, where the requirement arises under an Act, with the Minister to whom the administration of the Act is committed. Section 5 operates from the commencement of the Act for a period of up to 4 years, and then, if the defined project completion date is achieved during that initial period, for a further 10 year period.

The provisions of the Bill have been constructed to provide an appropriate level of certainty necessary to ensure that Nyrstar and its investors can commit to the massive investment to achieve the Transformation.

This Bill is designed to ensure that decisions in relation to lead-in-air conditions for a transformed Port Pirie smelting facility are made on the basis of a triple bottom line assessment of all relevant matters—taking into account and achieving a balance between environmental, social and economic factors.

Control remains with the EPA to set the initial lead-in-air limits during the period (up to 6 months) following the project completion date. This is to allow the EPA to consider the operating performance of the asset post-commissioning, to ensure the limits are achievable on a sustainable basis. However, when the EPA is setting the initial lead-in-air limits, the Bill stipulates that the EPA will afford both the Company and the Manufacturing Minister the full opportunity to consult with the Authority. This is designed to ensure, not only that the environmental factors are considered in setting the limits, but also that the potential for significant social and economic impacts and benefits, for Port Pirie and the region, are taken into account.

Similarly, when the Manufacturing Minister is making decisions under both section 4 and section 5, the Bill requires that the Minister considers a full spectrum of relevant matters, including any submissions from the Company and the relevant Ministers of the Crown, relevant medical and scientific information, the international standards relating to lead emissions, and of course any potential impacts on the Port Pirie community as well as the potential impacts on the Company.

When the Transformation is complete, many direct benefits will flow to the local community, the region and to the State as a whole. It will give rise to a range of important benefits—economic, health, social and environmental benefits.

Summarising firstly health improvements expected to result from the Transformation:

In the health area, the key benefit of a successful transformation is that emissions of lead will be significantly reduced (along with emissions of other pollutants like sulphur dioxide and carbon dioxide), increasing the number of children with blood lead levels below the National Health and Medical Research Council's guideline from the current level of 77.8 per cent of Port Pirie children tested in 2012 to at least 90 per cent. With ongoing emissions reducing, the work of cleaning up the contamination that has built up over 120 years can have a greater impact.

Most importantly, continued commercial operations will ensure ongoing funding for the Targeted Lead Abatement Program to address health risks in children with elevated blood lead levels, that is being developed by the State and Nyrstar. This program will drive additional reductions in blood lead levels and is expected to further increase the number of children meeting the guideline from 90 per cent to 95 per cent.

And now the economic benefits of the Transformation:

The jobs of thousands of people depend on the facilities continuing to operate. Direct wages and salaries paid to these individuals total around $270 million each year. Much of this goes straight into the local economy. Much of the rest ripples out into the wider economies of the State and the region.

Nyrstar's value add contribution to South Australian Gross State Product (GSP) is around $518 million per annum. It contributes some $1.6 billion to the value of South Australia's economic output, including an average annual contribution to exports of around $755 million.

The technological transformation of the Port Pirie smelting facility is consistent with the move towards an advanced manufacturing economy for SA, as the technology employed will be state-of-the-art.

Nyrstar Port Pirie will continue to pay taxes of just over $100 million per year.

There will also be clear benefits in terms of reduced impacts on the environment

Following the Transformation, the Port Pirie facilities will give rise to less emissions of lead and other metals.

Emissions of sulphur dioxide will also be reduced.

The Transformation will result in improved energy use through recovery of energy from the smelting process; heat will be converted to steam, resulting in significant electricity cogeneration and consequent reduced load on the existing state electricity grid.

The transformed facility will have a smaller carbon footprint. And potable water use will be more efficient.

And, of course, the Transformation will result in a number of important social benefits.

The company supports its community through a wide range of programs and initiatives. Between 2007 and 2012, Nyrstar spent far in excess of $4 million on community programs.

Their primary focus is to support initiatives that deliver the health improvements for the community.

Specifically to date these initiatives have included sponsorships for breakfast programs within schools and child care centres, assistance to community support agencies such as Uniting Care Wesley, donations to local organisations, community events, and educational health promotions targeting young children and those disadvantaged in the community.

Nyrstar also supports organisations that focus on supporting those with disabilities in the community, helping to deliver a better quality of life.

The regulatory certainty provided by this Bill is a necessary precursor to the company deciding to invest in the Transformation project. If for any reason the project does not occur, there is every likelihood that Nyrstar will be forced to shut down the Nyrstar Port Pirie site. Closure of the site would have impacts and consequences that are extremely serious.

The first impact is that unacceptably high levels of unemployment would occur. In short order, some 850 people directly employed at the site would lose their jobs. Modelling has determined that the jobs of some 2,500 others depend indirectly on successful ongoing operation of the Port Pirie smelter and associated facilities. Over time these people also would lose their jobs. The local economy would suffer significantly, and the economy of the State would be seriously affected. Social disruption in the town and adjacent region would be extensive.

But probably the most serious outcome would be that, as the company would no longer be operating in Port Pirie, the operation would no longer be able to contribute to the necessary ongoing funding to clean up the lead contamination in the town that has built up over 120 years. Governments would be left as the only source of such funding.

The Port Pirie Smelting Facility (Lead-In-Air Concentrations) Bill is squarely aimed at providing the necessary regulatory certainty for Nyrstar to invest in the Transformation which will unlock those benefits for the local community and the broader region.

I commend the Bill to Members.

Explanation of Clauses

1—Short title

2—Commencement

These clauses are formal.

3—Interpretation

This clause inserts definitions for the purposes of the measure. Important definitions include:

maximum lead-in-air condition which is defined to mean a condition of the relevant environmental authorisation that specifies the maximum permissible air concentration of lead at a location or locations in Port Pirie specified in the relevant environmental authorisation; and

project which is defined to mean the redevelopment of the plant by the Company to transform it from a primary lead smelter to a poly-metallic processing facility by replacing the existing sinter technology with enclosed bath smelting processing technology and the carrying out of associated works; and

relevant environmental authorisation which is defined to mean any environmental authorisation under the Environment Protection Act 1993 applying from time to time in relation to the Company's operations in connection with the plant.

4—Provisions relating to reduction of maximum lead-in-air condition by Environment Protection Authority

This clause provides that Environment Protection Authority may not, during the period commencing on the project completion date and ending on the commencement day (both of which are defined), vary a maximum lead-in-air condition in a way that would have the effect of reducing the maximum specified in the condition unless the Environment Protection Authority has consulted with the Manufacturing Minister and the Company.

This clause then provides that, during the prescribed period (which is defined), the Environment Protection Authority may not vary a maximum lead-in-air condition in a way that would have the effect of reducing the maximum specified in the condition.

However, the Manufacturing Minister may approve a variation of a maximum lead-in-air condition (in which case the above prohibition does not apply). Certain procedural requirements apply before the Manufacturing Minister may do so.

In addition, the Company can consent to a variation of a maximum lead-in-air condition.

It is also provided that nothing in the prohibition above—

applies to a condition of the relevant environmental authorisation other than a maximum lead-in-air condition; or

affects any requirement for the Company to take reasonable and practicable measures to prevent or minimise any environmental harm that may result from its operations in connection with the plant.

5—Maximum lead-in-air condition not affected by other laws of State

This clause modifies the law of the State so that a relevant requirement is taken not to apply to the Company during the prescribed period (but only to the extent that the relevant requirement has the effect of reducing the maximum permissible air concentrations of lead at a location or locations in Port Pirie specified in a condition of a relevant environmental authorisation). In addition, an exception to subclause (1) is provided for so that the modification of the law does not apply to the extent that the Manufacturing Minister determines, by notice in writing to the Company, that a particular law or relevant authorisation specified in the notice should not be so modified, or should only be modified as specified in the notice. Certain procedural requirements apply before such a determination may be made.

A relevant requirement is defined to mean any requirement applying (whether directly or indirectly) to the Company under—

a law of the State; or

a relevant authorisation,

that would have the effect of reducing the maximum permissible air concentrations of lead at a location or locations in Port Pirie specified in a condition of a relevant environmental authorisation.

6—Immunity provision

This clause provides that no act or omission undertaken or made by the Manufacturing Minister or any other person engaged in the administration of the Act with a view to exercising or performing a power or function under the Act gives rise to any liability (whether based on a statutory or common law duty to take care or otherwise) against the Manufacturing Minister or other person or the Crown.

Debate adjourned on motion of Hon. J.S.L. Dawkins.