Governments warned about $240m Nyrstar subsidy payouts

A group of international shareholders is urging Australian state and federal governments to reconsider providing hundreds of millions of dollars in subsidies to global commodities giant Trafigura, which operates Nyrstar smelters in Port Pirie and Hobart. These smelters collectively employ about 1,400 people.

The core of the issue lies in a legal battle in Belgium over Trafigura's 2019 takeover of Nyrstar's global operations. Shareholders who owned Nyrstar shares claim their holdings were transferred to a shell company, Nyrstar NV, which they allege is controlled by Trafigura. Kris Vansanten, managing partner for RSQ Investors and one of the involved shareholders, stated, "The suspicion, the abuse of corporate assets is directly pointing to Trafigura today."

Despite these ongoing legal disputes, the Australian federal government and the governments of Tasmania and South Australia have already provided Trafigura with $240 million in taxpayer funds. This includes $105 million disbursed early last month to maintain operations. Letters sent to governments last year, before the initial $135 million installment, warned about the legal action against Nyrstar NV, asserting that the company was "tied with its hands, teeth and everything to Trafigura."

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The suspicion, the abuse of corporate assets is directly pointing to Trafigura today.

Adding to the concerns, Nyrstar NV itself announced last month that it was "formally placed under suspicion" as part of a Belgian criminal probe. The investigation reportedly concerns "alleged forgery and the use of false annual accounts, as well as for alleged misuse of corporate assets." While the company maintains it has acted correctly and legally, the shareholders, including former EU Commissioner of Trade Karel De Gucht, have sent letters warning governments that the ownership of the Port Pirie and Hobart facilities remains subject to criminal, regulatory, and civil proceedings.

These warnings come as Trafigura reported a nearly $6 billion profit in its latest half-yearly results in June, highlighting the company's financial strength even as its Australian subsidiaries face scrutiny over alleged financial misconduct and disputed ownership.

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The company [Nyrstar NV] is tied with its hands, teeth and everything to Trafigura.