Glencore Gets Funding ‘Lifeline’ from Australia to Keep Copper Smelter Afloat
(Bloomberg) — Glencore Plc said it will receive a combined A$600 million ($395 million) from the Australian federal and Queensland state governments to keep its Mount Isa copper smelter and associated refinery running for another three years.
The funds follow an eight-month negotiation over Glencore’s request for financial support to keep its operations running amid rising cost pressures. Closure at Mt Isa was seen as a significant economic threat to the region and its industries.
“This agreement provides a short-term lifeline for the copper smelter and refinery and comes after Glencore had already stepped up to absorb significant financial losses to maintain operations and jobs while working on a solution with government,” Troy Wilson, chief operating officer for Glencore’s Australian metals business said in a company statement.
A decade of aggressive Chinese expansion across the metals supply chain has driven intense competition, forcing numerous smelters across the world, including in Australia, to shut down.
After neglecting to maintain their own capacity for years, the US, European Union and others are racing to reduce their reliance on China. The issue has taken on greater urgency after Beijing curbed exports of several critical minerals, including rare earth metals used in the defense and energy industries, in response to US President Donald Trump’s trade war.
However, government bailouts for Glencore, and the sector more broadly, may not be effective without an overhaul of supply chains, lower energy costs, and advancements in technology to make smelters more competitive, according to Laurence Dyer, an associate professor and specialist in metallurgical engineering at Curtin University in Western Australia.
“There’s the potential for Glencore to ride out the current market fluctuations” thanks to the government support, Dyer told Bloomberg in emailed comments. “The other potential is that this provides time to consider augmentation of the operation to provide profitability, whether that’s through decreased cost or efficiency gains, or through a more significant change in future technology.
“Three years and $600 million may be too tight of a window to enact it but enough time to investigate options,” he said.
Earlier this year, the Australian government provided $87 million to Trafigura Group for the Port Pirie lead smelter and Hobart zinc smelter, as losses mounted due to high costs and competition from China. Renovations at Port Pirie will begin this week, according to a separate government statement.
The Mt Isa smelter processes up to 1 million tons of concentrate sourced from miners nationwide, among them BHP Group, which supplies ore from its Olympic Dam operation more than 1,000 kilometers (621 miles) away in South Australia. With support now secured, Glencore said it plans to invest a further A$2.5 billion into its Australian operations, which also include two zinc-lead mines in Queensland. Glencore closed its two copper mines in the region earlier this year.
(Updates with expert comment in sixth and seventh paragraphs.)
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