Pirie smelter energy costs rise by millions of dollars

COSTS: Nyrstar smelter faced higher energy costs in the first half of this year, according to its company report.
COSTS: Nyrstar smelter faced higher energy costs in the first half of this year, according to its company report.

Energy prices have risen dramatically for the Nyrstar smelter, according to the company’s half-yearly report.

The costs at Port Pirie increased period-over-period by about $20 million because of higher coking coal prices and by about $25 million across the zinc smelters due to greater electricity prices. 

Direct operating costs year-over-year were up 12 percent at about $505 million, predominantly due to the energy costs which increased by 31 percent compared with the corresponding time last year.

Lead production of 84,000 tonnes was 12 percent lower compared with the corresponding time last year because of a slow blast furnace rate resulting from a heat exchanger failure in the old acid plant and operational issues in the sinter plant that have negatively affected sinter quality.

Production was affected by a 12-day blast furnace outage to repair leaking water jackets and a damaged fume hood. These issues have now been largely resolved. 

Company chief executive officer Hilmar Rode said the company was “optimising” the Port Pirie “transformation” redevelopment to accelerate and ”de-risk” the project.

“We are happy that the redevelopment remains on track for hot commissioning by the end of September,” he said.

The first feed of the new TSL furnace will start in October and total project cost will be about $660 million.

“The review of our zinc smelting network to identify operating performance improvements is underway and we expect to have this largely completed in this quarter,” Mr Rode said.

Group profit of about $165 million was achieved for the half-year, an increase of about $31 million on the corresponding time last year, chiefly because of a 50-percent increase in the average zinc price and strengthening of the United States dollar, partly offset by lower treatment charge terms and reduced production at Port Pirie

Metals processing profit of about $174 million was up about $19 million year-on-year, driven primarily by higher commodity prices, partly offset by lower zinc treatment charges and reduced lead and by-product production.

Substantially-improved mining profit of about $22 million was $20 million higher year-on-year, sparked by higher commodity prices and lower treatment charges, partly offset by negative EBITDA contribution from the restart of the Middle Tennessee Mines in the US.

Strategic priorities for the second half of the year and into 2018 include delivering the redevelopment and starting the ramp-up to design capacity as well as completing the full potential review of the company’s zinc smelting network;