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Nyrstar declares force majeure at Port Pirie, Australia, lead smelter

  • Author
  • Mayumi Watanabe
  • Editor
  • Jonathan Fox
  • Commodity
  • Metals

London — Switzerland-based metals group Nyrstar has declared force majeure at its Port Pirie lead smelter in South Australia on an unplanned outage, the company said Friday.

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"The stop in production is due to an unplanned outage that has caused some damage to the blast furnace at Port Pirie. The production outage commenced on the evening of 28 May 2019 and we are currently working to resolve the issue and resume production as soon as possible," the company's head of investment relations, Anthony Simms, said.

Port Pirie, where lead metal production fell 7% in 2018 to 160,000 mt, is Nystar's only lead production facility. The majority of the lead metal is sold to Trafigura under the terms of an offtake agreement, Simms said.

Asian traders said Friday that the reduction in Australian supplies may have prompted lead prices and premiums to gain on Thursday, when the London Metal Exchange lead settlement price rose to $1,945/mt from $1,881.50/mt Wednesday earlier. However, the LME official lead price settled Friday at $1,837/mt, down $108 from Thursday.

Still, spot premiums for prompt deliveries could rise starting next week when China and South Korean market participants return from holidays, and LME stocks may decline on limited spot supplies, the traders added. LME lead stocks shed 25 mt on Friday to 66,525 mt, following declines earlier in the week.

According to one trader, the Port Pirie closure was expected to last around two weeks. China and South Korea were closed Friday for public holidays. Japanese traders said that since Japan was almost self-sufficient for lead, there was no immediate impact on Japanese consumers. Seaborne trade is limited to less than 20 mt/year, several Japanese traders said.

Global lead production was 11.6 million mt in 2018, according to International Lead and Zinc Study Group.

In its full-year 2018 results report, published May 27, Nyrstar said its Port Pirie Redevelopment program continued to ramp-up in line with management expectations.

Last year's 7% year-on-year fall in output at the smelter was due to a 38-day planned blast furnace maintenance outage in the second quarter and a blast furnace shutdown in December, when the company chose not to operate the site's old sinter plant in order to further support reducing lead in air emissions, which ended the year below the defined limit.

Nyrstar also performed maintenance on the top submerged lance (TSL) furnace and blast furnace in December. These maintenance shutdowns were to address a furnace cooling issue and to bring forward maintenance on the blast furnace previously scheduled for January 2019. The TSL furnace resumed operation on December 15, it said.

The company registered a negative pro-forma underlying EBITDA result for Port Pirie in 2018 due to increased costs due to the furnace ramp-up, higher energy prices, the production outage in December and technical process bottlenecks which reduced the recovery of metal from the feed, it said. Lower lead treatment charges and metal prices also hurt the result, Nyrstar said.

The total project cost for the Port Pirie Redevelopment is approximately A$714 million ($500.93 million), inclusive of feasibility study costs and project management labor costs, it said.

-- Mayumi Watanabe, Diana Kinch and Ben Kilbey, newsdesk@spglobal.com

-- Edited by Jonathan Fox, newsdesk@spglobal.com