Concerns smelter closure exposes Australia to geopolitical risk

Future of Liberty Bell Bay site in doubt following manganese smelter's closure Fri 17 Jul 2026 at 5:24am In short: Tasmanian government minister Felix Ellis says the shuttered Liberty Bell Bay will require "a substantial clean-up effort". The state's peak mining and mineral processing body says the closure leaves Australia more exposed to geopolitical risks. What's next? Mr Ellis says he is confident a $20 million loan from the state government to the smelter's former owner to purchase ore is recoverable. Australia's only manganese alloy smelter has closed, leaving the future of the site uncertain and the country more reliant on imported alloys for steel production. The beleaguered Liberty Bell Bay smelter, roughly 50 kilometres north of Launceston, produced an alloy from manganese ore called ferromanganese, a critical component of steelmaking with applications across defence, construction and mining. It halted operations in May last year due to issues securing ore supply and volatile market conditions, and in August received a $20 million loan from the Tasmanian government so its former owner, GFG Alliance, could purchase a shipment of manganese ore to continue operations. But the smelter never restarted. In January 2026, GFG had defaulted under the state's loan agreement, and the Tasmanian government moved to appoint receivers and managers to protect the 23,000-tonne ore stockpile. By March Liberty Bell Bay had been placed into voluntary administration. Now, with a consortium of buyers unable to reach an agreement to restart the smelter, the future of the site remains unclear. 'Significant rehab liabilities' The Tasmanian government has left the door open to another smelter operating at the site. "There may still be opportunities in the future for a smelter operator to control the site and bring it back into production," said Tasmanian Minister for Business, Industry and Resources Felix Ellis. Mr Ellis said while it was too early to provide specifics about the site's long-term future, bringing it back to operation in the short-term was no longer an option. Cleaning up the site, he said, was an obligation that still sits with the administrators and owners. "It is a substantial clean-up effort that would be required at this site,"Mr Ellis said. "Certainly, Tasmanians would understand that these major industrial sites do have significant rehab liabilities." In October, a report by William Buck, the administrators of Sanjeev Gupta's Whyalla Ports Pty Ltd, provided some insight into what the rehabilitation of the site could cost. "Management have indicated a further working capital facility still needs to be sourced for Liberty Bell Bay (LBB) to maintain operations and, in the event of the failure of LBB and closure of the facility, a rehabilitation claim valued at approximately $200 million would crystallise," the report said. Tasmanian Minerals, Manufacturing and Energy Council (TMEC) chief executive Ray Mostogl said while he did not have exact figures he believed closing the smelter would be costly. "In my view it's going to cost more to decommission and rehabilitate than it is to restart it,"Mr Mostogl said. He said the situation would also be tough on the wider supply chain of contractors, suppliers, engineers and experts. "I think we're going to see a domino effect go through the Tamar Valley as a result of what we've been advised today," he said. Closure a hit to Australia's metal production ambitions The manganese smelter's closure means Australia has lost the capability to process the critical mineral domestically. "But that doesn't mean that we can't continue to mine it or produce manganese concentrates," said Dr Tim Werner, a senior lecturer in the energy transition at the University of Melbourne. "It just means that they'll be processed overseas. "I'd say it's more of a hit to Australia's ambitions to being a domestic producer of metals." Dr Werner said the smelter's closure would predominantly affect the market for manganese alloys used in steelmaking, and there could be flow-on effects for a range of local industries. However, he said those industries existed in an already volatile market accustomed to geopolitical risk and potential supply chain disruptions. In March, Australia released more than $50 million in funding to help create a domestic critical metal refining industry. "It's a new market, it's a volatile market, and the competition, particularly from overseas, is extremely strong," Dr Werner said. "The conversations we need to have are: 'how realistic are our ambitions to produce more metals in Australia?'" Without domestic production, TMEC's Mr Mostogl said Australia would have to rely on international imports for its steel production. "From a sovereign risk point of view we're now more exposed to geopolitical risks, and these decisions made in other countries about whether they're going to supply and at what price," Mr Mostogl said. "It's not a great outcome for Australia now, and it will have ramifications as to how we secure that supply chain so that we've still got a steel industry." Ore purchased through loan remains on site It remains unclear what will happen to the smelting furnaces, fume dams, sinter plant, stormwater, leachate ponds and slag stockpiles at the site, as well as the ongoing environmental management of them. The Environment Protection Authority (EPA) Tasmania issued a notice to Liberty Bell Bay in April over concerns the smelter's ability to "fulfil critical environmental obligations" was in doubt. "The EPA is aware that if staff are reduced at the site there may be insufficient staff to maintain critical equipment," EPA Tasmania director Catherine Murdoch said. "I am satisfied that, although smelting activities have ceased, environmental flows will continue and may become polluted." Among the EPA's concerns were the risk of polluted wastewater being discharged into the nearby Tamar River, the ongoing storage of hazardous materials on site, and the continued maintenance of dust emissions. And there is another consideration: the ore purchased through the Tasmanian government's loan remains on site. "The reason why the ore is still there currently is because we wanted to give the future owner the best possible chance of restarting in as short a possible period of time," Mr Ellis said. He said the Tasmanian government had "very high-ranking security" over the ore and the broader site, and was confident the loan would be recovered. "We retain that security. The ore has retained its value," Mr Ellis said.