Trafigura Group has initiated a strategic review of its underperforming Nyrstar zinc and lead smelting operations in Australia. Chief Executive Officer Richard Holtum, who assumed leadership at the beginning of this year, called for increased government support, emphasizing that the nation’s smelting capacity is a critical national security concern.
“Smelting capacity is a national security issue and therefore there probably needs to be significant government support for it,” Holtum stated during the Financial Times Commodities Global Summit in Lausanne, Switzerland. His comments underscore the growing concerns over the sustainability of smelting operations in an increasingly competitive global market.
As Western governments discuss strategies to counter China’s dominance in mineral supply chains, the financial strain on metal processing plants is becoming more apparent. A surge in competition for raw materials combined with persistently high costs has put pressure on smelting operations worldwide. This has led to a worrying trend: spot treatment charges for zinc and lead concentrates have largely remained below zero since the second half of 2024, indicating that smelters are paying to process ore instead of earning revenue from it.
Trafigura operates two key smelting facilities in Australia under its majority stake in global processor Nyrstar. In Hobart, the company runs a primary zinc smelter with a 280,000-ton capacity, while in Port Pirie, it operates a 180,000-ton per year lead smelter. Despite these significant operations, Holtum admitted that these facilities have become “uneconomical” due to rising competition from Chinese producers.
As part of a broader review of its global smelting assets, Nyrstar has already announced plans to reduce output by approximately 25% at its Australian zinc smelter starting in April. Trafigura’s major competitor, Glencore Plc, is also assessing its global zinc smelting assets, signaling that tightness in the concentrate market may soon extend to the metal markets.
“There are no sacred cows here,” Holtum said, emphasizing that every asset owned by the company, including the struggling Nyrstar Australia operations, is under careful review.
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