Australia Pours $135 Million Into Zinc Smelters to Try Counter China’s Export Pressure
Udumbara
Just months after a major report warned of the strategic risks posed by Australia’s weakening metals refining sector, the Albanese government has announced $57.5 million to support two key zinc smelters in South Australia and Tasmania.
The funding forms part of a broader $135 million transformation package backed by the South Australian and Tasmanian governments, contributing $55 million and $22.5 million respectively.
The move aims to rescue the smelters from mounting global pressures—including a flood of cheap zinc exports from China—and reposition them for the critical minerals era.
The investment will allow international metals producer Nyrstar to keep its Port Pirie and Hobart operations running while advancing detailed plans to modernise both sites and pivot toward refining high-value critical minerals.
The package will fast-track feasibility studies into producing strategic minerals like antimony and bismuth at Port Pirie, and germanium and indium at Hobart—materials essential for defence, electronics, clean energy, and advanced manufacturing.
An antimony pilot plant in Port Pirie will be a priority, potentially making it the only site in Australia producing the metal. Antimony is an alloy hardener for other metals in ammunition and critical to manufacturing semiconductors, it is also used in flame retardants, lead-acid batteries, and other industrial applications.
The overall plan also includes infrastructure upgrades, engaging more than 550 contractors and suppliers.
As per the announcement, Nyrstar contributes $1.7 billion annually to the economy and employs 1,400 workers, with 6,600 jobs supported indirectly. “Through this partnership, Australia is demonstrating that it is at the forefront of taking meaningful steps to retain nationally strategic smelters and partner with industry to provide urgent short-term support, as well as work on solutions for their long-term viability,” said Nyrstar CEO Guido Janssen.
Rich Reserves, Weak Processing
The announcement follows the Economic and Strategic Importance of Multi-Metals Processing report, released in May which warned that Australia’s deteriorating refining capacity could cost jobs, economic resilience, and national security leverage.The report, commissioned by Nyrstar and prepared by Mandala Economics, warned that Australia’s refining capacity is deteriorating.
Australia holds 37 percent of the world’s lead reserves—well ahead of China’s 23 percent and Russia’s 9 percent—and 27 percent of global zinc reserves, compared to China’s 20 percent and Russia’s 12 percent.
Yet despite this, Australia ranks third in refined lead exports and second in refined zinc, behind countries like South Korea and India.
Mandala argues that without immediate investment to support smelting and processing, Australia risks missing its chance to become a leading global supplier of critical minerals.
Global zinc demand is expected to outstrip supply by roughly 1,400 kilotonnes by 2030.
China Accounts for Over Half of Global Critical Mineral Processing
China has built a vertically integrated refining system that extracts high-value by-products at low cost. The Mandala report reveals China now accounts for 52 to 82 percent of global critical minerals processing, depending on the mineral.Supported by state subsidies, Chinese smelters can absorb refining losses, and profit from downstream manufacturing. Meanwhile, global treatment charges—once a vital revenue source for smelters—have fallen to decade lows, squeezing Australian operators.
Chinese firms can also afford to pay more for concentrates by recovering more by-products.
Rising Geopolitical Risks
Geopolitical tensions are intensifying.In 2023, China cut off antimony exports in response to U.S. semiconductor restrictions. It also banned rare earth processing technology exports, moves seen as attempts to control global mineral flows.
A 2024 Lowy Institute study warns these actions reflect a deliberate strategy to block competitors and preserve China’s dominance. The report urged Australia to move beyond symbolic diplomacy and lead in building secure supply chains with allies such as the United States, Japan, South Korea, and Canada.
In March Albanese government announced a pre-election pledge to establish a Critical Minerals Strategic Reserve. Scheduled for 2026, the Reserve aims to stockpile key minerals and secure supply via long-term agreements.
The initiative includes $1.2 billion in funding, with $1 billion to expand the Critical Minerals Facility and $7 billion in production tax incentives to attract private investment.
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