PERTH (miningweekly.com) – The South Australian government and mining and metals company Nyrstar have agreed to a A$514-million investment to transform the Nyrstar smelter at Port Pirie, the company announced on Monday.

The 120-year-old smelter would be converted into an advanced metals recovery and refining operation. The smelter would have the capacity to produce a range of metals, including some 250 000 t/y of refined lead, 40 000 t/y of zinc in fume, 7 000 t/y of copper, 25-million ounces if silver dore and 100 000 oz of gold.

The smelter overhaul was expected to be complete by the end of 2016.

Under the agreements reached between Nyrstar and the state government, the metals development company would make a A$103-million direct contribution to the project, while the South Australian government would underwrite a seven-year A$291-million third-party funding guarantee.

Nyrstar would contribute a further A$120-million, which would be raised through a transaction for the forward-sale of silver output from the Port Pirie facility.

Nyrstar CEO Roland Junck said the funding agreement gave the company the certainty it needed to move forward and transform Nyrstar Port Pirie into an advanced metal recovery and refining facility.

“We remain on track with work on site for this year, major construction work to begin early next year, with the port facility to be fully operational by the end of 2016.”

Minister for Regional Development Geoff Brock said securing the future of production at Port Pirie ensures Nyrstar remains a significant contributor to the South Australian economy as an exporter and a major regional employer.

“This is a very significant day in the history of Port Pirie. It’s great news, not just for the city and the Upper Spencer Gulf, but for South Australia.”

Meanwhile, Nyrstar announced that it would cease zinc metal production at Port Pirie by the end of July this year, and would process zinc oxide at its other smelter assets.

The zinc plant was expected to close by the end of 2015 and Nyrstar would engage and consult with employees and their representatives with a focus on available retraining and redeployment opportunities to other parts of the Port Pirie operation. This decision would have no impact on the overall redevelopment of the Port Pirie smelter.