UK-based firm eyes Tasmanian smelter in liquidation

UK's Natrium Redox Technologies pitching green future for Liberty Bell Bay smelter In short: The Liberty Bell Bay manganese smelter in northern Tasmania is now in liquidation. US private equity firm White Oak is a secured creditor and reportedly has fresh interest in acquiring the site. What's next? UK-based firm Natrium Redox Technologies, which wants to trial green technology at the site, says the Tasmanian and federal governments should be advocating to ensure the outcome is good for Australia, not just creditors. A UK-based green technologies company that wants to acquire Australia's only manganese alloy smelter says the state and federal governments should still be working to secure the site's future, despite it being in liquidation. Northern Tasmania's 66-year-old Liberty Bell Bay went into liquidation earlier this month, after being placed into administration in March due to financial issues with former owner Sanjeev Gupta's GFG Alliance. While a consortium that included US-based private equity firm White Oak was selected as the preferred buyer, the deal collapsed and the smelter closed, with around 200 workers losing their jobs. Creditors then voted to wind up Liberty Bell Bay, with EY Parthenon appointed liquidators. Their primary role is now to recover as much as possible for creditors. White Oak is among the smelter's secured creditors and, according to the Australian Workers' Union, is reported to have fresh interest in acquiring the site. It is understood it would first want the state government to waive its environmental liabilities. But British-based Natrium Redox Technologies executive chairman Dr Bill Higgs said his company has been in talks with state and federal governments since March on its own proposal, which it says offers better outcomes for creditors and Australia. "I think the challenge becomes how to manage a strategic question for the state and the federal government in a world where you've got a clearly defined administration and liquidation process that is running the show,"he said. Tasmanian Industry Minister Felix Ellis said he had formally requested EY ensure all credible proposals are properly considered through an appropriate market testing process before the site's future is settled. "EY controls the site as liquidator and any decision about its future is ultimately a matter for EY," Mr Ellis said, adding that last week he wrote to ASIC, along with the federal treasurer, seeking its support for the liquidators to investigate the conduct of GFG Alliance and "pursue any appropriate asset recovery or enforcement action". Multiple ideas for site Dr Higgs said Natrium Redox had developed technology that produces high-purity manganese without emitting carbon. Manganese is a critical component in steel making. He said the Liberty Bell Bay site was an ideal location to test that technology at a commercial scale. "It's a chemical-based process where we, rather than using coke to strip the oxygen from manganese ore, we actually use sodium to do that same process," he said. "And it essentially enables us to produce high-purity manganese powder without emitting any CO2." He said Natrium Redox has two proposals for the site. The first would see it restart the traditional furnaces while also putting in a manganese processing plant, to scale their technology. Dr Higgs said it would process 35,000-70,000 tonnes a year, which would add 20-40 per cent to the existing plant's manganese production. But he said it was approaching the point where restarting the furnaces would not be viable. "The longer those submerged arc furnaces go without being restarted, the more cost and risk there is in the restart," he said. "So there comes a point of diminishing returns where they will naturally become abandoned. "I think we're probably not far from when that occurs." The second proposal would see them put in a plant to process around 20,000 tonnes a year of the site's existing waste, which would help remediate the area. "The nature of smelting is that it's a fairly rough way of cutting metal," Dr Higgs said. "There's quite a lot of alloy carryover into the slag and into the fines (leftover ore particles). "Because of that … we can apply our technology to recover those carryover metals." Dr Higgs said the restart proposal could eventually employ more than 220 workers, while the remediation proposal would initially employ around 14. Mr Higgs said the model would fit with many of the federal government's green energy ambitions: from its critical minerals and Future Made in Australia strategies to decarbonisation. "Being able to deliver ultra-high purity manganese powder for the EV and battery world maximises the value of the asset to Australia," he said. But he said it would require some support from governments. He claimed the Bell Bay site "has never been insured on a standalone basis" and believed around $30m needed to be invested immediately to "get to that start line". He said a combined $15m should come from the state and federal governments, while Natrium Redox would contribute the rest. A spokesperson for Federal Industry Minister Tim Ayres confirmed the liquidators were in talks with interested buyers. It is understood any discussion between potential buyers and the federal government would be commercial-in-confidence. Writing down liability Dr Higgs pointed out the Tasmanian government is also among Liberty Bell Bay's secured creditors and should be making its views on the site's future known. "So, it's in their interest to try to get a strategic outcome for the state,"he said. He said if the site was disclaimed or if another company took on the site but with the environmental liability waived, the site would be left with an estimated $200m clean-up bill. He said while Natrium Redox would also want environmental liabilities waived, he said the remediation proposal would see that liability written down over time. "Our proposal enables the remediation of the site, plus also putting that site back to immediate use where there is no waste that needs to be remediated, and then a progressive return of the site to other uses as we work through the remediation of the stockpile." Both Natrium Redox and reportedly White Oak want access to the power deal previously negotiated between Hydro Tasmania and Liberty Bell Bay. Tasmanian Industry Minister Felix Ellis said any proposal involving energy arrangements, environmental liabilities or taxpayer support must be in the best interests of Tasmanian taxpayers and the community. Tasmanian Labor's Janie Finlay said the state government should be doing "everything it reasonably can" to support a proposal that restarts operations and delivers the strongest long-term outcome. Natrium Redox is a young company with technology yet to be tested at scale. Asked if that could give the government pause, Dr Higgs said: "you've got to start somewhere". "We've been working on the technology for about six, seven years now," he said. Dr Higgs said Natrium Redox planned to finance the proposal through private equity, debt financing and potentially some UK government streams. It has already registered an office on Launceston's Paterson Street. But he said it would also look for opportunities elsewhere. "We're going to widen our search and start talking to others about processing other raw materials using the technology." An 'intriguing' proposal Tasmanian Minerals, Manufacturing and Energy Council chief executive Ray Mostogl said he was not surprised the Liberty Bell Bay site was attracting interest, despite being in liquidation. He said while the smelter was now without a workforce, it also meant a new company would be spared employee entitlements and other liabilities. He said the Natrium Redox proposal, from the little he had read about it, was "intriguing". He said building pilot plants to test new technology was expensive, so there would be benefits in doing it at an existing site. He also said Natrium Redox's decarbonisation ambitions could be "a big step forward" for the site. "I think we'd accepted the news that [Liberty Bell Bay] was over, which was quite sad — to think that there might be a 13th-hour bid is interesting," he said.