Question Time

Nyrstar

The Hon. D.G.E. HOOD (14:51): My question is to the Treasurer. Will the Treasurer update the council on the status of the government's negotiations with Nyrstar at the moment?

Members interjecting:

The PRESIDENT: Treasurer, I didn't hear the question. The Hon. Mr Hood, can you please restate the question?

The Hon. D.G.E. HOOD: Certainly, sir. My question is to the Treasurer. Will the Treasurer update the chamber on the government's negotiations with Nyrstar?

The Hon. R.I. LUCAS (Treasurer) (14:51): I thank the honourable member for his question. As I indicated in some brief comments to the media yesterday, yesterday I met with the chief financial officer operating out of Singapore for Trafigura. As members will be aware, Nyrstar is likely to cede control to their current majority shareholder Trafigura, but that process will not be completed until about June or July this year.

I think I have indicated to the chamber on a previous occasion that I have spoken to the global CEO of Trafigura, Mr Jeremy Weir, who is formerly from Melbourne. Mr Nicolas Marsac has been given delegated responsibility by Mr Weir to involve himself in Nyrstar management in discussions with the South Australian government and Nyrstar local management in terms of the potential operations and complicated financial arrangements the people of South Australia have with Nyrstar in relation to the deal the former Labor government entered into.

The government has indicated that there are two clear objectives that we have on behalf of the people of South Australia. One, most importantly, is that we want to see a successful redevelopment of the Port Pirie project, and I am pleased to be able to report, as I did previously in relation to Mr Weir's telephone conversation, that Mr Marsac yesterday reaffirmed that, should Trafigura be successful, they see the Nyrstar Port Pirie project as being a very important part of the global operations of the Trafigura group, as well as the operations in Tasmania—although we don't have direct control in relation to those.

However, they reaffirmed yesterday that from the viewpoint of the Trafigura company they see a successful Port Pirie project redevelopment and operation, a continuing operation, as being important to their company's interests. On behalf of the people of South Australia and, in particular, the people of Port Pirie, I repeated the importance of that project for ongoing employment for very many residents of Port Pirie and their families. Mr Marsac, on behalf of Trafigura, acknowledged the importance of the Port Pirie project to the local community.

My understanding is that when Mr Weir visits—potentially next month if current arrangements progress as smoothly as they appear to be going publicly at the moment—it is likely that not only will he visit with key stakeholders in Adelaide but he intends to visit Port Pirie as well in terms of putting a public face to the profile of potential new owners and operators of the Port Pirie plant.

The second clear objective I have indicated to, firstly, Nyrstar and now to Trafigura is that, on behalf of the taxpayers of South Australia, we are clearly interested in protecting the taxpayers' interests. We have $291 million swinging in the breeze, potentially, in relation to this particular deal. We have been engaged in complicated and complex discussions with, formerly, Nyrstar management since late last year.

I am pleased to indicate, as was announced yesterday, that Nyrstar, after discussions with its largest shareholder Trafigura, has written to us confirming that they will meet, for the first time, the full payment in May of this year underneath that particular deal. That will involve a payment of $42 million, of which $29 million will come off the potential exposure of $291 million that taxpayers have to this complicated deal.

On behalf of the government, I welcomed that announcement from Nyrstar. I think it is a sign of good faith. My understanding from state government officers and advisers who met with Mr Marsac, the Nyrstar management and Trafigura's advisers, that is Morgan Stanley, is that discussions over the last two days have been productive and constructive. We welcome the fact that those discussions are now continuing with the active engagement of Trafigura, as well as, clearly, the existing Nyrstar management.

We are hopeful that we might be able to reach a successful resolution to those discussions. I cannot guarantee that at this stage, but there is every indication from the productive and constructive nature of the negotiations that we might be able to reach a successful conclusion on behalf of the taxpayers of South Australia. That would involve an agreed arrangement in relation to paying down the potential exposure over a coming period of time that the taxpayers of South Australia have to this particular deal.

In terms of the timing of those negotiations, there is a natural potential end point to this, and that is that sometime in June or July Trafigura's potential takeover of Nyrstar has to be confirmed or not. Clearly, prior to that particular deadline they will need to have reached an arrangement with all of their global bondholders and financiers, together with the state of South Australia.

As I have indicated publicly, as the Treasurer of South Australia I do have the capacity to approve or not the potential transfer of ownership, and that has certainly been part of the discussions that I had yesterday and officers have been having over recent days in relation to trying to come to a successful conclusion to these arrangements. So I am hopeful that in the not too distant future we might be able to report a successful conclusion to those discussions.