(Bloomberg) — Trafigura Group has launched a strategic review of its struggling Nyrstar zinc and lead smelting assets in Australia, with Chief Executive Officer Richard Holtum calling for government intervention.
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“Smelting capacity is a national security issue and therefore there probably needs to be significant government support for it,” Holtum, who became Trafigura CEO at the start of this year, said at the Financial Times Commodities Global Summit in Lausanne, Switzerland.
Despite discussions among Western governments over challenging China’s dominance of minerals supply chains, metals processing plants across the world have been under financial strain as competition for raw materials heats up and costs stay high.
In a sign of a supply shortfall relative to smelter demand, spot treatment charges for zinc and lead concentrates have mostly stayed below zero since 2024’s second half — meaning smelters have had to pay to process ore.
Trafigura operates two smelters in Australia through its majority ownership of global processor Nyrstar. In Hobart it has a 280,000 ton per year capacity primary zinc smelter and in Port Pirie it has a 180,000 ton per year lead smelter. Those operations, which employ about 1,300 people, are “uneconomical” in the face of Chinese competition, the CEO said.
Nyrstar has already announced plans to cut around 25% of output at its zinc smelter in Australia from April. Another major zinc producer, Glencore Plc, is also pushing ahead with a review of its global zinc smelting assets, raising the possibility that tightness in the concentrate market will pass into metals.
“There are no sacred cows here,” the CEO said. “So what we’re looking at is every single asset that we own, we’re doing a strategic review of some of our struggling assets, Nyrstar Australia being a particular one.”
Zinc declined 0.6% to $2,955 a ton on the London Metal Exchange at 11:11 a.m. in Singapore, while lead was also down.
–With assistance from Winnie Zhu and Jessica Zhou.
(Updates with context about treatment charges and production review in fourth and sixth paragraphs. Also added prices in last paragraph.)
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