Legislative Council Fifty-Fourth Parliament, First Session (54-1) 54 1 Parliament of South Australia Legislative Council published Question Time Nyrstar Nyrstar The Hon. C. BONAROS Legislative Council Nyrstar The Hon. C. BONAROS (14:56): I seek leave to ask a question of the Treasurer regarding Nyrstar. Leave granted. The Hon. C. BONAROS Legislative Council The Hon. C. BONAROS: The Advertiser has just reported online—hot off the press—that Nyrstar, which owns the Port Pirie lead smelter, has had its credit rating cut and faces a very high probability of default, putting at risk $290 million in debt which has been guaranteed by South Australian taxpayers. According to the article which I am referring to, in November the Treasurer met with Nyrstar chief executive, Hilmar Rode, and struck a deal that would involve them making a $20 million payment towards its Port Pirie smelter loan, but we don't know the detail of that. That payment was to be the first of its kind received by Nyrstar's Port Pirie financiers after it missed deadlines in May and then again in November. I understand that the Treasurer has indicated, and I quote: No, the Government has not received the $20 million. However, the government continues to have constructive discussions with Nyrstar as our agreed time frame, and we are working towards a successful resolution around the end of the first quarter. My questions to the Treasurer are: 1.	What does this mean in terms of the $290 million debt guaranteed by South Australian taxpayers? 2.	What actions are you taking to ensure this doesn't eventuate? 3.	Are you concerned that South Australian taxpayers will never see the $290 million commitment? The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS (Treasurer) (14:58): I thank the honourable member for her very important question. As the member would be aware, I have made a number of statements and responded to a number of questions, I think from the Hon. Mr Stephens and the Hon. Mr Hood, late last year on this very important issue. As the honourable member has identified, this is an extraordinarily complicated deal that was entered into by the former Labor government, the end result of which is that taxpayers of South Australia are potentially exposed to a payment, in the worst set of circumstances, of up to just under $300 million ($291 million). We are obviously hopeful, on behalf of the taxpayers of South Australia, that that doesn't occur. Obviously, it's not in the interests of the taxpayers of South Australia but, equally, it's not in the interests of the workers and families in Port Pirie whose livelihoods clearly are significantly impacted by the success or otherwise of Nyrstar as an organisation and Nyrstar in terms of the redevelopment that is occurring there at the moment. The only aspect of the reported statement in The Advertiser that I would take issue with slightly is that it does indicate that I said in November we had 'struck a deal' with Nyrstar. That is certainly not what I said at the time, and it is certainly not an indication that I would agree with now. What we did do is we had a constructive discussion with Mr Hilmar Rode, who is the chief executive officer of Nyrstar globally and that time line mapped out—hopefully concluded by the end of the first quarter of 2019, so the end of March 2019—a rearrangement of the circumstances, part of which would involve an up-front payment of $20 million. The fact that we have not received $20 million at this stage is consistent with the fact that we have not yet reached a concluded agreement by the end of the first quarter. As I am accurately quoted there in the Adelaidenow story, my advice is that we are continuing to have constructive discussions as per the agreed time frame, which was the end of March 2019, and we are working towards what we hope will be a successful resolution in and around about that particular time period. The story to which the honourable member refers is a story from Moody's, and another unnamed analyst as well, which certainly paints the global position of Nyrstar in a very unfavourable light in terms of its financial circumstances, but there have been in the last two days one or two similar stories in industry journals having done an analysis of Nyrstar's operations globally as well. What we can highlight is that the problems Nyrstar is confronting globally have been acknowledged for some time by Nyrstar, and it was their plan that the success of the Port Pirie operation would not only be good for Port Pirie but would be good for Nyrstar globally as well. The cashflow that they hoped to be generated from a successful redevelopment of Nyrstar was hopefully going to generate significant cash for Nyrstar globally as well. Some of the stories have referred to public announcements late last year from Trafigura, which is the largest shareholder within Nyrstar. Certainly, it has already been referred to that Morgan Stanley and others have been working with Nyrstar globally in terms of providing financial advice to them about restructuring their debt and equity structures within their company internationally. So I think all that is a summary of is that it continues to be a very challenging environment for Nyrstar globally, and that clearly has implications for Nyrstar Port Pirie, and that clearly has implications for the workers and families in Port Pirie potentially, and it clearly potentially has implications for the taxpayers of South Australia to the tune of $291 million. I hasten to say we are hopeful that that will not occur, I hasten to say that our officers are working as hard as we can with Nyrstar to try to prevent that from occurring and I hasten to say that at this stage we should not just accept that all is lost in relation to this. We should not believe everything that is being written in relation to the prospects of Nyrstar's survivability. We, of course, can't guarantee anything; it is not our position to do so. What we are seeking to do is to try to protect the taxpayers, and the workers and families and the investment in Nyrstar at Port Pirie. Given that we inherited the deal, we are doing the best we can with the deal we have inherited.